The Faces of 90.5 WESA
Wed July 24, 2013
As Obama Renews Jobs Push, How Is The Economy Doing?
Originally published on Wed July 24, 2013 10:35 am
The U.S. economy has been growing for four straight years — each under the leadership of President Obama.
But the pace of improvement has been disappointing to many, especially the nearly 12 million people still looking for work.
Americans are divided about how to view the White House's economic record. A McClatchy-Marist poll released this week shows 54 percent of Americans think the country is still in an economic downturn. But that dreary assessment is actually a big improvement considering that as recently as March, 63 percent thought the country was in a recession.
Now Obama is launching an effort to renew focus on job creation for the middle class. The White House says he will make about a half-dozen speeches around the country, with the first Wednesday afternoon at Knox College in Galesburg, Ill.
That's where he made a pivotal speech on the economy in 2005 — his first year as a U.S. senator. And on Monday, Obama told supporters that upon this return to Knox, he will deliver "a pretty good speech."
So as the White House gets ready for this new campaign to begin, let's take stock of five key indicators of economic health:
Jobs: Most economists say that nothing matters more than job growth. More jobs can quickly translate into more people buying cars, moving into new homes, taking vacations and otherwise stimulating growth.
But job creation has been slow throughout the recovery, with the unemployment rate staying stuck at 7.6 percent. This spring, the hiring pace picked up, to around 200,000 new jobs per month. In more normal times, that rate would give a president bragging rights, but at a time when 11.8 million remain out of work and another 8.3 million are stuck in part-time jobs, the economy is not adding enough paychecks.
Housing: After a tough — no, make that hideous — run of foreclosures and price plunges, the housing market finally is improving. The sector peaked in 2006, and then went into a nose dive that pushed prices down by roughly a third.
But the widely followed S&P/Case-Shiller Home Price Indices show average home prices have popped back up by roughly 12 percent over the past year. And mortgage defaults have been easing. So the market appears to be healing, though many homeowners are still a long way from seeing their real estate values return to 2006 levels.
Debt/deficit: The long-term national debt hovers at $16.75 trillion, roughly the same size as the entire U.S. economy. But thanks to this year's federal spending cuts and tax hikes, the annual budget deficit is shrinking fast.
The Congressional Budget Office says the fiscal 2013 deficit probably will decline to just 4 percent of GDP, down dramatically from 7 percent in 2012. By 2015, the deficit should be down to about 2 percent of GDP — a level that most economists would say is quite manageable. In light of such improvement, Moody's this month upgraded the U.S. credit rating outlook from negative to stable.
Interest rates: Whether they're buying a car or a home, most Americans are very concerned about interest rates. Over the past three months, mortgage rates have been heading higher, up from roughly 3.5 percent in early May to about 4.5 percent now for a 30-year-fixed mortgage. That remains a very low level by historical standards, and the upward trend has petered out, at least for now.
Economists generally say rates are still low enough to make cars and homes affordable for people with jobs. And for businesses, the prime lending rate is holding steady at 3.25 percent — a rate that makes it easy to borrow money for expansion.
Consumer sentiment: In general, consumer confidence has been rising over the past year, thanks to gains in jobs, stock prices and home values. The University of Michigan Consumer Sentiment Index showed the highest reading in May and June of any time since before the recession began in late 2007.
But a preliminary reading of the index for July suggests some of the spring's optimism has started to melt this summer as mortgage rates have ticked up. Sentiment also has declined as more workers have felt the effects of government spending cuts. In June, retail sales grew just 0.4 percent, a disappointing rate.