|Snapshots of why this recovery is missing its groove|
|Thursday, 13 September 2012 08:14|
The U.S. economy grew at a lackluster 1.5 percent annual pace from April through June. The economy’s other vital signs aren’t looking very healthy, either:
Jobs - Job growth nationally has slowed sharply – to an average of 75,000 a month in the April-June quarter from a robust 226,000 month in the first three months of 2012. Unemployment has been stuck at 8.2 percent for two straight months. The economy isn’t growing fast enough to generate stronger hiring.
Consumer Spending - Consumers have been holding back, one reason economic growth was so slow in the April-June quarter: Once you adjust for inflation, consumer spending barely grew from March to April – and didn’t grow at all from April to May. Spending on autos and other big-ticket durable goods actually fell in May. All this is worrisome because consumer spending accounts for about 70 percent of U.S. economic activity.
Manufacturing - Manufacturing shrank nationwide in June for the first time in three years, the Institute for Supply Management said this month. The group’s April and May surveys both showed expansion, but it slowed from April to May. Europe’s financial crisis and slower growth in emerging markets such as China and India have reduced demand for U.S. goods. Environmental regulations are also a growing burden on businesses of every size especially in states like California. CARB’s On-road Truck and Bus rule will cost business at least $13 billion with no financial or even environmental returns, as the environmental costs to build a new truck far outweigh slight emission improvements or alleged health benefits.
Business Investment - Business orders that signal investment plans have declined in three of the past four months. So-called core capital goods fell 1.4 percent from May to June. Such goods include computers, equipment and heavy machinery. Orders rose from April to May, but declined in the previous two months. The downward trend suggests that businesses are less confident in the economy.
Pay - After adjusting for inflation, wages in the private sector grew 0.8 percent from March through June. That was the fastest three-month pace since early 2009. But inflation-adjusted wages are still below where they were when the recession ended in June 2009. Employers haven’t had to offer healthy wage increases: In this weak job market, many workers haven’t had anywhere else to go.
Housing - The recovery of the housing market has lost some momentum. Most economists think housing is improving, but slowly, regionally and unevenly. Sales of new and previously occupied homes both fell from May to June. They had been rising, or at least flat, in May and April. The National Association of Realtors’ index of sales agreements fell 1.4 percent last month to below a reading considered healthy. But the index is higher than it was a year ago. Builders are more confident and are breaking ground on more homes. Construction of single-family homes rose to a two-year high last month. Mortgage rates are at record lows.