US economy: Steady as she goes

Jun 19, 2013

America's economy will hum along its path of moderate growth, adding 4.7 million jobs through the end of next year, say University of Michigan economists.

" will not exceed 200,000 jobs per month, however, until output growth ratchets up to a sustained 3-percent pace during the second half of next year," said U-M economist Joan Crary. "With this moderate pace of job growth, employment will finally exceed its January 2008 peak around mid-2014, a six-and-a-half-year span."

In their annual summer forecast update of the U.S. economy, Crary and colleagues Daniil Manaenkov and Matthew Hall predict overall growth (as measured by real ) of 2.2 percent during this year and 3 percent during next year—compared with last year's 1.7 percent growth.

Unemployment is expected to improve to 6.8 percent by the end of 2014, they say. The unemployment rate averaged 8.9 percent in 2011 and 8.1 percent in 2012 and is projected to average 7.5 percent for the current year.

"Sluggish labor force growth has contributed to the drop in the during the recovery," Crary said. "As improve, workers should return more quickly to the labor pool, slowing the improvement in the jobless rate."

In addition to moderate growth in GDP and employment this year and next, the forecast calls for steady recovery in the . Single-family housing starts increased by more than 100,000 units last year to 540,000 and are expected to rise to 700,000 this year and to 950,000 in 2014. Existing single-family home sales are expected to rise from 4.1 million in 2012 to 4.4 million this year and to 4.8 million in 2014.

The U-M say that light vehicle sales will continue to improve, from 14.4 million units last year to 15.3 million units this year and 15.7 million units next year.

"Easing credit conditions for auto loans, along with pent-up demand, are helping to support sales," Manaenkov said. "In recent months, light trucks have accounted for more than half of light vehicle sales. Analysts attribute some of that improvement to rising demand for pickup trucks associated with the recovery in homebuilding activity."

Finally, the forecast predicts that headline inflation will remain subdued at less than 2 percent through the end of 2014, while interest rates will move slightly upward, but still stay low.

The U-M forecast is based on the Michigan Quarterly Econometric Model of the U.S. Economy and compiled by the U-M Research Seminar in Quantitative Economics. For more information, visit www.umich.edu/~rsqe.

Explore further: Narcissistic CEOs and financial performance

add to favorites email to friend print save as pdf

Related Stories

US job recovery: Half way there

Nov 16, 2012

Over the next two years, the U.S. economy will regain the rest of the nearly 9 million jobs lost in the Great Recession, say economists at the University of Michigan.

Research: U.S. economy will continue slow road to recovery

Mar 19, 2010

(PhysOrg.com) -- After surging in the last quarter of 2009, the U.S. economy will continue to recover at a fairly steady moderate pace this year before picking up a bit more next year, say University of Michigan economists.

Recession may be over, but recovery will be gradual

Nov 19, 2009

(PhysOrg.com) -- With the severe national recession of the past two years finally behind us, the pace of economic recovery will be slow and unemployment will remain high for quite some time, say economists at the University ...

Recommended for you

Narcissistic CEOs and financial performance

Jul 24, 2014

Narcissism, considered by some as the "dark side of the executive personality," may actually be a good thing when it comes to certain financial measures, with companies led by narcissistic CEOs outperforming those helmed ...

Drugmaker GSK slashes annual profits forecast

Jul 23, 2014

British drugmaker GlaxoSmithKline on Wednesday slashed its 2014 profits forecast as second-quarter earnings sank on the back of weak US trade, adverse currency moves and a Chinese bribery probe.

User comments : 0