US economy recovering but isn't yet accelerating

Associated Press Modified: May 3, 2012 at 5:00 pm •  Published: May 3, 2012
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WASHINGTON (AP) — The U.S. economy's recovery looks enduring. It's just not very strong.

Hiring, housing, consumer spending and manufacturing all appear to be improving, yet remain less than healthy. Economists surveyed by The Associated Press expect growth to pick up this year, though not enough to lower unemployment much.

A clearer picture of the nation's economic health will emerge Friday, when the government reveals how many jobs employers added in April.

"The outlook is for continued moderate growth," John Williams, president of the Federal Reserve Bank of San Francisco, said in a speech Thursday. "Nonetheless, we have nearly 4½ million fewer jobs today than five years ago, and the unemployment rate remains very high at 8.2 percent."

The 32 economists polled by the AP late last month are confident the economy has entered a "virtuous cycle" in which more hiring boosts consumer spending, which leads to further hiring and spending. They expect unemployment to drop from 8.2 percent in March to below 8 percent by Election Day.

But they still think the rate won't reach a historically normal level below 6 percent until 2015 or later. And they predict hiring will slow the rest of this year from a relatively brisk December-February pace.

The government's economic data have been sending mixed signals about the health of the recovery from the Great Recession. Here's a look at the economy's vital signs:

— JOBS

The job market is gradually improving, though not as fast as it had been. From December through February, employers added a strong 246,000 jobs a month. That figure sank to a weak 120,000 in March. The April jobs report could clarify whether March was a one-month dud — or evidence of a more lasting slowdown in job creation like the one that occurred in mid-2011.

The economists in the AP survey foresee average job growth of 177,000 a month from April through June and 189,000 for the next six months. The economy needs to generate about 125,000 jobs a month just to keep up with population growth.

On Thursday, the government said the number of people who applied for unemployment benefits last week fell by a sharper-than-expected 27,000 to a seasonally adjusted 365,000. That pointed to fewer layoffs and a brighter outlook for hiring.

Further cause for hope came in a government report Thursday on worker productivity: It fell from January through March by the most in a year. Declining productivity could be a positive sign for jobseekers. It may signal that companies are struggling to squeeze more from their workforces and must hire to keep up with customer orders.

— HOUSING

The housing market has been a dead weight on the economy. The single-family home market, in particular, is still struggling. House prices dropped for six straight months through February, according to the Standard & Poor's/Case-Shiller home-price index. And Americans bought fewer previously owned homes in March.

The economists polled by the AP worry that the lingering effects of the housing bust are slowing the economy's expansion. They say growth can't accelerate until national home prices finally hit bottom.

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