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Published: Tuesday 30 July, 2013

longchamp travel tote longchamp travel tote GDP Improves and Questions Linger

economy is growing healthy? The January employment report offered a surprising 243,000 jobs created, which was about 100,000 more jobs then the consensus figure amongst economists. Add to this the other good news that the overall unemployment rate dropped to 8.3%, which is its lowest level since February 2009. It was the fifth consecutive month that the unemployment rate has fallen, which is the first time this has happened since 1994. Even the number of jobs created in December 2011 was upwardly revised to 203,000 from 200,000 along with November 2011 figures being boosted to 157,000 jobs from the 100,000 that was initially reported.1

Related topics 2012 economy economy;jobs

Also, last month we received the initial GDP estimate from the Bureau of Economic Analysis, Americas fourthquarter GDP was +2.8%, not bad a full percentage point better than the previous quarter, but not what economists anticipated.2

Now how could the best GDP number in six quarters, be interpreted as a slight disappointment?

Headline numbers were good, yet some of the details? The economy grew 2.8% in Q4, but that doesnt tell the whole story. Much of the fourth quarters expansion was due to companies ordering more goods to restock their warehouses.

At $56 billion, inventory rebuilding was actually the biggest factor in Q4 growth, not final sales. Economists expect restocking is likely to slow in the first three months of this year which would be a drag on further GDP growth. If that implication plays out, it could put a drag on 2012s Q1 GDP.1

It was the most jobs added since and April and May 2010, when 277,000 and 458,000 jobs were created. But those months were skewed by massive hiring for the census bureau. Before that, the last month with more jobs created was March 2006. During this last quarter many are concerned about two key details in the report :the expansion of parttime employment nearly 700,000 workers and that the nation still needs about 5.6 million fulltime jobs to get back to 2007 levels, shows the nation is a long way from being at full health.

Further there are still 12.8 million people out of work, and though that is the fewest since the recession ended. This leaves an additional 11 million Americans either working parttime but would prefer fulltime work, or have stopped searching for jobs. Once those groups are combined, nearly 24 million are considered underemployed. The socalled underemployment rate ticked down i longchamp travel tote n January to 15.1 percent, from 15.2 percent. Thus you now have the brunt of the argument from those who assert why enthusiasm should be dampened for these recent economic reports.

At 2.8%, GDP growth is in line. Since the 1990s, the economy has recovered from each recession less rapidly than it previously did. Part of this may be because America relied more on its manufacturing sector during the 1960s and 1970s when the country still made things. companies this is a strong factor in the slow reemployment of a large segment of the domestic workforce. Impressively, the job gains last month were spread across the economy.

One of the pleasing trends reported in the fourth quarter was that hiring accelerated across the economy up and down the pay scale. The leisure and hospitality industry, which includes restaurants and hotels, added 44,000 jobs. Retailers added nearly 11,000. The highsalary professional services industry added 70,000 jobs, the most in 10 months. While we saw manufacturing added 50,000 jobs in the quarter, the most in a year. Even the beleaguered construction sector added 21,000 jobs, its second month of strong gains is Housing finally at a bottom?. Perhaps this last figure might have been helped by unseasonably warm weather this winter.

Looking at the last several downturns, here is the average GDP in the five quarters following a quarter in which a recession ended according to the judgment of the National Bureau of Economic Research:

After Q1 1961: +6.9%

After Q4 1970: +5.1%

After Q1 1975: +5.5%

After Q3 1980: +2.6%

After Q2 1982: +7.8%

After Q1 1991: +3.0%

After Q4 2001: +1.9%

After Q2 2009: +2.9%

The unemployment rate has also taken more time to fall in more recent recessions. After the 20001 downturn ended, it took 48 months for employment to return to prerecession levels. As for the previous postWWII downturns, it only took an average of 20 months for the jobless rate to make a full recovery.2,3,4

Still the unemployment rate is nearly a percentage point lower than over the summer, when many feared a recession was imminent. The unemplo longchamp travel tote yment rate fell even as more people began looking for work. But a much larger number of Americans said they found work.

This is our Recovery. The economy is rebounding as might be expected from the recession, given recent examples. While many Americans have high expectations, a swift recovery may not be forthcoming. However, one especially encouraging note indicates the recovery may be standing on stronger legs, as Q4 saw a 0.8% increase in real disposable income after a 1.9% drop in Q3 and a 0.5% retreat in Q2.2

Ultimately, more jobs and higher incomes should help consumers boost spending and increase sustained economic growth. So some may sense they have missed their moment to invest in the opportunities presented by this growing economy; while others may be proven correct in proceeding with caution.. longchamp travel tote