Economic Reasons for Giving Thanks
I am sure we all have many personal things to be thankful for as we head into the Holiday Season. Here are just two economic items to add to your list; US growth, and jobs.
First, US growth. Back to back quarters of 3% growth in Q2 and Q3 are solid, though hardly spectacular. However, a recently released economic model at the Atlanta Federal Reserve is predicting 4.5% growth in Q4. While no model is perfect, theirs has a good track record over the past few years. Even better news is that the growth is broad-based. Nearly all segments of the US economy contributed, including exports, imports, business spending on long-term projects, and consumer spending, the largest single segment. The Institute of Supply Management publishes a monthly index that we follow closely, and it continues to forecast solid growth. ‘Wild Cards’ that are not fully baked into most economic forecasts include companies moving back to the US, for example the recent Broadcom announcement for a new US headquarters. According to various estimates, US companies have as much as $2.5 trillion, yes trillion, stashed away outside the US, so any progress on repatriation efforts could also provide a boost.
The US has added jobs in each of the past 85 months. Initial reports showed a loss in September (hurricane related) but that was revised to a small gain. While that seven years growth has been historically slow, the unemployment rate is 4.1%, the lowest since 2001. And this has been accomplished in the face of some headwinds like the hurricanes and also political uncertainty. A broader measure of joblessness that includes discouraged workers, and those at work part-time for economic reasons, fell sharply to 7.9%. One year ago it was at 9.5%. As with the growth numbers, it is encouraging that there is job growth across small, medium, and large businesses. Job creation was also strong in diverse industries including construction, hospitality, manufacturing, and healthcare. One of the things we are keeping an eye on here is the labor force participation rate, which has been in a decline since 2000. The trend appears to have bottomed out and is beginning to increase, albeit quite slowly. A continuing of even a small upward move would be positive for the economy.