State of the Economy
- Submitted by: yurp
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- Category: Politics: Economics
- Date Submitted: 04/07/2010 09:58 PM
- Pages: 3
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State of the Economy
Economic indicators show that the US economy is recovering from a very serious decline (recession). The strength and durability of the recovery is still in question as there are conflicting signals from several key indicators.
GDP, as shown in the first chart from the Department of Commerce, has been rising since the middle of 2009. However, the GDP increase has been helped by significant government spending and economic stimulus leading many experts to question the strength of the economic recovery.
The Chicago Federal Reserve Bank publishes the National Activity Index (CFNAI) which, though not well known by the public, has one of the best track records in measuring the economy. The latest CFNAI is shown in the second chart. The chart shows that economic activity has improved but has not yet reached the level that signals a strong recovery. The chart indicates that the current economy is in a sort of “no man’s land” between recession and recovery.
The economic weakness is confirmed by total employment levels as shown in the third chart. Employment as a percent of the working age population is a better measure of employment than the well know “official” unemployment rate. The official unemployment rate does not count discourage job people who have left the job market. The employment percentage chart shows that the percent of people working has fallen significantly and is still declining. Also, chart four shows that new unemployment claims have stopped falling over the last month indicating businesses are still laying off workers.
This employment weakness is confirmed in the fifth chart which shows both total hours worked and personal income excluding government payments. Total hours worked has stopped declining but is not yet improving. And consumer income net of government stimulus and payments is flat as well. These two economic indicators normally increase at the same time that GDP increases. But that is not happening...
Economic indicators show that the US economy is recovering from a very serious decline (recession). The strength and durability of the recovery is still in question as there are conflicting signals from several key indicators.
GDP, as shown in the first chart from the Department of Commerce, has been rising since the middle of 2009. However, the GDP increase has been helped by significant government spending and economic stimulus leading many experts to question the strength of the economic recovery.
The Chicago Federal Reserve Bank publishes the National Activity Index (CFNAI) which, though not well known by the public, has one of the best track records in measuring the economy. The latest CFNAI is shown in the second chart. The chart shows that economic activity has improved but has not yet reached the level that signals a strong recovery. The chart indicates that the current economy is in a sort of “no man’s land” between recession and recovery.
The economic weakness is confirmed by total employment levels as shown in the third chart. Employment as a percent of the working age population is a better measure of employment than the well know “official” unemployment rate. The official unemployment rate does not count discourage job people who have left the job market. The employment percentage chart shows that the percent of people working has fallen significantly and is still declining. Also, chart four shows that new unemployment claims have stopped falling over the last month indicating businesses are still laying off workers.
This employment weakness is confirmed in the fifth chart which shows both total hours worked and personal income excluding government payments. Total hours worked has stopped declining but is not yet improving. And consumer income net of government stimulus and payments is flat as well. These two economic indicators normally increase at the same time that GDP increases. But that is not happening...