The U.S. economy was a bit shaky at the start of the year. We are now just past the half-way point, so let’s take a look at what has progressed.
Since the end of the recession we have seen the U.S. economy grow at a slow and steady pace. The first quarter of 2014 was a bit of a shocker as the GDP declined 2.1%. Most economists blamed the decline on the harsh winter months that impacted both consumers and businesses. Since that time, we have seen signs of solid growth, reflecting a healthier economy. The first estimate of the second quarter GDP indicates the economy grew at a 4% pace. This gain has been led by consumer spending as confidence is up on both current and future conditions. Business investments are also higher. The Western and Southern regions of the country posted the strongest economic gains, year-to-date.
2013 was almost a mirror image of 2012 in terms of employment growth, as 2.3 million and 2.2 million jobs were created, respectively. During the first half of 2014, 1.4 million workers were added to the payrolls, or 233,000 per month. This is an improvement from the 203,500 monthly averages for 2013. In addition, we have seen the unemployment rate fall from 7.5% at the beginning of the year to 6.1% in June. Over the last 12 months, the number of unemployed individuals declined by 2.3 million. Over half of the jobs created in 2014 were in the various service industries. Even though the economy has recovered all of the jobs lost during the recession, a recent report states that the average annual wage of jobs lost in 2008-2009 was 23% higher than the average wage of job gains through the second quarter of 2014.
The housing market is improving; however, the gains remain limited. This segment of the economy is still impacted by a limited supply of units, tight credit conditions, existing homeowners with too little equity and potential first-time homebuyers burdened by student loan debt. The rate of household formation remains low, impacting housing starts. Existing home sales are up slightly from the 2013 total, while home price appreciation is more moderate. This, along with low mortgage interest rates, should help in keeping homes more affordable and attractive to first-time homebuyers.
Most forecasts for GDP and employment are very encouraging with stronger gains as the year progresses. With job growth, and hopefully incomes, on the rise, consumer confidence should trend higher, which should bode well for the housing market. And, a healthy housing market should support further economic gains.
What do you expect for the remainder of 2014? Please share in the comments.Tags: Economy, Employment, GDP, Housing Market, Mortgage Industry