Is It Time to Worry About the Health of the U.S. Economy?
While we’re supposed to be in a period of recovery from the Great Recession, the economy has been lagging more than expected lately. Does this lack of growth mean we’re slipping back into a recession?
If we are, it’s not one similar to what we saw in 2008 because the unemployment rate isn’t soaring up. Rather growth has been stalling this year, enough to make the Federal Reserve question whether to hike interest rates in June as it has said it wants to.
Growth stalled a lot in the winter. Annual gross domestic product growth dropped to 0.2%, and according to the Atlanta Fed’s GDPNow model, it’s only increased to 0.9% since. And the Washington Post suspects that any positive growth in the first quarter could be revised now that we know the U.S. trade deficit grew to the highest level in more than six years in March. The gap increased 43.1% to $51.4 billion, according to the Commerce Department, exceeding the estimates of 70 economists surveyed by Bloomberg. Foreign goods, capital goods, and consumer products were purchased at record rates, while demand for petroleum dropped.
Those facts are what make economists nervous, but employment growth may be keeping us from falling into a real recession.
How is this affecting jobs?
Despite adding 591,000 jobs this year, the the unemployment rate remained unchanged at 5.4%, according to the U.S. Bureau of Labor Statistics. In April, the number of unemployed persons (8.5 million) stayed about the same as the previous month. Overall, the unemployment rate went down by 0.8 percentage point for the month, and the number of unemployed dropped by 1.1 million for the month.
“We see this report as reducing concerns that weak first-quarter growth represents a loss of economic momentum,” Michael Gapen, chief U.S. economist at Barclays in New York, said to Reuters.
The BLS said in its latest report that total nonfarm payroll employment increased by 223,000 in April, slightly below the monthly average of 257,000 jobs added over the past year.
Though the it’s not as strong as economists would like, this growth is probably still enough that to keep the Fed on track to raise interest rates, a sign that they think the economy is safely recovering.