US Economic Outlook Feb 2012

The US economy has come a long way from 2008, when the Lehman crises took the rug right out from underneath private sector. According, to various economic forecasts, it seems the US economy is back on the path of growth again. According to the US Dept of Commerce, The unemployment rate dropped to 8.3 percent and 243,000 jobs were added in January, making this the 23rd consecutive month of job growth. Private sector job growth has been driving the decrease in unemployment, with the private sector adding 257,000 jobs last month. The manufacturing sector alone grew by 50,000 jobs in January, showing that manufacturing is still an important and growing part of the American economy. In the last two years, manufacturing added 330,000 jobs in the U.S. – the strongest growth since the 1990s. The department also reported that new orders for manufactured goods rose 1.1 percent in December 2011.

This is great news for consumers and small businesses alike, since many people were worried that the US economy might enter another round of recession before starting on the path of recovery. But from what these statistics show, the US economy is already back on the path of growth. The 2011 year was also a great year for consumer incomes as reported by the department, with personal incomes ending the year on a positive note-increasing 0.5 percent in December, its largest gain since February 2011. Another bright spot is the construction sector, the same industry that was one of the hardest hit by the whole sub-prime mortgage crises. According to Mark Doms, Chief Economist of the US Commerce Dept, like many other economic indicators, construction spending finished the year on an upward trend. Total construction spending in December 2011 was $816.4 billion at a seasonally adjusted annual rate, up 1.5 percent from the revised November 2011 estimate and up 4.3 percent from December 2010.  Further, construction spending grew each of the last five months in 2011.

Furthermore, according to the NY Times, the report “provides further evidence that the U.S. economy is strengthening,” Paul Dales, senior United States economist at Capital Economics, wrote in a note to clients. But he warned that the economic momentum might fade quickly, as it did after strong starts to 2010 and 2011. “As the unwinding of the previous fiscal stimulus starts to bite and as global demand falters, something similar may be on the cards this year,” he said. My personal guess is that the US has officially pulled out of the after effects of the recession, and is definitely on the path of growth. Since, regardless of global economic developments, most of the US economy is based upon the American consumer, and evidence shows that the consumer is coming back. Which means, that small businesses can start investing more again, knowing that demand is not going to dry up so quickly.

-Jay Zadey


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