Data has shown that American consumers are feeling more upbeat about the economic future as the number of people being fired dropped to its lowest level since before the recession began. Many economic experts believe that this shows economic growth could be just around the corner. A report revealed recently that the Bloomberg Consumer Comfort Index showed an increase to minus 23.5, which is considered to be its strongest reading since January of 2008. Data from the Labor Department also showed that the average number of people who have applied for jobless benefits has dropped to just 335,500 in the four weeks proceeding the 3rd of August.
Almost every income group in the country, except one, has seen an increase in confidence in early August, and the biggest pay advances appeared to be at the lower end of the scale, which could signify a period of improvement. The rest of 2013 may experience a small lift as the number of dismissals declined, which could signify that we are about to see an increase in hiring. Chief US Economist, Jim O’Sullivan who works at the New York based company High Frequency Economics, believes that these recent improvements could signify that a bigger change is about to take place. He comments, “The labor market is probably the most important determinant of the rise in confidence. If the labor market keeps chugging along, as it seems likely to do, consumer spending should start to pick up in the second half.”
The world’s economy also appears to be poised for improvement as imports into the United States from China and Germany increased. This, coupled with interest rates being at a record low in the US and Europe, shows that the global economy is on the road to recovery.
The good news continued with figures showing that in July, the number of payrolls increased by another 162,000 workers, which is still the lowest rate seen in almost four months when compared to the 188,000 rise in June. The number of people who were unemployed also dropped from 7.4 percent to 7.6 percent, its lowest rate in over four years. Chief Economist at Pantheon Macroeconomist Inc. located in White Plains, Ian Shepherdson, believes that we should proceed cautiously with these figures, “Every 10,000 decline in applications that is sustained over a month is roughly equivalent to a 25,000 increase in the pace of payroll gains. These data need to be watched.”
Recently the Labor Department issued another report that showed the number of job openings in June increased to its highest level in over five years. The same report also showed that fewer people were fired in the month of June when compared to the previous five months. Experts believe that this shows the demand for workers is strong enough for businesses to keep their current staff.
However, a closer look at the figures from the Labor Department shows that the majority of the job growth recorded over the past six months of 2013 was caused by part time work. Senior researcher at the Mercatus Center at George Mason University was amazed by the discovery and said, “Over the last six months, of the net job creation, 97 percent of that is part-time work. That is really remarkable. That is a really high number for a six-month period. I’m not sure that has ever happened over six months before. There is something going on if such a large share of the hiring is part time."
Economists have predicted that the American economy will experience a 2.5 percent annual expansion during the period of July to December, which is a good 1.4 percent increase when compared to the first half of 2013. A Bloomberg survey which interviewed 59 different economists between the 2nd of August and the 6th of August showed that this pace has continued on from July, a positive sign for future economic growth. These same economists also believe that the number of people who are unemployed will drop to 7 percent by June of 2014.
These figures show that economic growth is happening, but very slowly. After the economic crash of 1981, it was 27 months before full time employment figures reached the same level as pre-recessionary times. And after 1990 it took 34 months. From this we can learn that the global economy is recovering, slowly but surely.
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