Positive Economic Signs Include Robust Jobs Numbers, GDP Growth
The U.S. economy, which has been slogging through a long, slow, tepid recovery for years following the Great Recession of 2007-2009, showed several positive signs this week, including higher-than-expected jobs numbers and GDP growth.
On Thursday the Commerce Department issued a report showing third-quarter gross domestic product grew at a rate of 2.8 percent, besting economists’ predictions of 2 percent and improving upon the second quarter’s 2.5 percent and the first quarter’s 2 percent. There were also some mixed signs in that report, as consumer spending (a key measure of economic health) slowed.
And on Friday morning the Labor Department’s monthly employment report showed the economy adding 204,000 new jobs in October, far exceeding expectations of around 120,000. This number could be revised upward or downward in the coming months, so it’ll be important to keep an eye on that. August and September’s numbers were revised upward by 60,000 jobs, indicating that employment gains were even better than we thought over the summer. The unemployment rate, which has been steadily coming down from a peak of over 10 percent in 2009, came in at 7.3 percent, just a tick higher than September’s 7.2 percent.
The 16-day government shutdown at the start of October appears not to have had much of an effect on the overall economy, likely because businesses expected all along that it would get resolved before too long. “The impact of the shutdown is much less than people feared, with businesses retaining great optimism about the future,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in the Wall Street Journal.
The shutdown did have a negative effect on the unemployment rate, though, as several hundred thousand federal workers were furloughed for about two weeks and were thus counted as out of work. That is a likely cause of the slight uptick, which occurred in spite of the sizable payrolls increase.
It’s important to keep in mind that while the jobs and GDP numbers were better than many had predicted, they are both much lower than a truly healthy economy would show. When the economy is really humming, you can expect growth of more than 300,000 jobs per month and GDP expansion in the 4-5 percent range. But with the way things have been going the last few years, combined with the ineptitude of officials in Washington, any signs of improvement are quite welcome.
In the next several weeks, things may start to pick up rather quickly, with many companies planning to add tens of thousands of seasonal workers for the holidays. Also, the rather chaotic events of October may have blurred the truth about exactly how well things went last month, and even back into September. As Ryan Sweet, a senior economist at Moody’s Analytics Inc., told Bloomberg, “You really want to see how the job market does in November before making any assessments about the underlying health of the job market. There are a lot of things pushing and pulling on the October numbers.”