Here are a few straws in the economic wind:
May is graduation month. Thousands of newly minted college graduates will swarm into the job market. Those who guessed right and did well in their studies either have jobs waiting or will find them before summer warms up. The rest will start the search. Many will take unskilled work because that’s what’s available. They will compete with high school grads and dropouts and be unhappy with their pay and prospects. Unemployment numbers will rise.
On the bright side of the coin, the U.S. economy will continue to grow slowly. Current estimates are for a growth rate between 2.5 percent and 3 percent. Personal income will continue to rise at about 2.8 percent, as it did during the first quarter. Nothing calling for brass bands and champagne, but the direction is right.
Savings rates fell because consumer purchasing rose, but Americans continued to save at almost 4 percent of their after-tax income
This isn’t a world-beater savings rate, but it looks great in comparison to the go-go years before the recession when Americans spent more than they earned, amassing billions in credit card and housing debts.
Speaking of housing, spending on home construction and renovations rose by the most in nearly two years. Perhaps because of the super-mild winter weather; perhaps because pent-up demand finally sparked new housing investment.
Chances are, all first-quarter numbers will be revised upward in May and again in June. They usually are as economists digest the mountain of statistics.
IF FIRST QUARTER numbers look weak to you, that’s not only because political critics keep telling you the country is going to hell in a hand basket, but also because you may be comparing 2012 numbers to headier days when growth rates of 6 percent and higher were routine. (Don’t forget that those high-growth years often sported inflation and interest rates to match.)
A better measure of the U.S. economy is the rest of the world. By contrast to our 2.5 percent growth, Britain’s economy will only grow .8 percent this year. Japan, which has been stagnant for a decade or more, is coming back a bit but still will be 25 percent behind the U.S. with 2 percent growth and the 17 nations that use the Euro as their currency are expected to shrink by a combined total of .3 percent.
When the rest of the “rich” world is shrinking or barely holding its own, the U.S. growth rate, however modest, looks solid.
Moreover, the U.S. private economy has been doing the heavy lifting. Government spending has been declining for six straight quarters — the longest stretch since 1955. Only now is state government income beginning to rise across the United States as it has been in Kansas, as the economy has perked up. “It’s hard for the economy to accelerate when the government has its foot on the brake,” Joel Naroff, president of Naroff Economic Advisors told an AP reporter.
To sum up: The United States of America still has a lead role on the world’s economic stage —but the drama in progress is dreary. It will take careful plodding to keep the forward pace.
— Emerson Lynn, jr.
