The Fed said the economy grew at a modest rate from late November to December due to holiday sales, increased demand for services, and oil and gas extraction. However, permanent job remains limited, while no sign of improvement in the housing market.
Although the economy continues to fair slightly better than last year’s, that is still not enough to create a strong and quick change on employment. The unemployment rate dropped from 9.4% to 8.4% in December. William C. Dudley, New York Fed president, said, “outlook for unemployment is unacceptably high.”
However, the Fed said, “The combination of limited permanent hiring in most sectors and numerous active job seekers has continued to keep a lid on general wage increases.” This limited inflation and decreased pressure to raise prices. The Labor Department reported that 200,000 jobs were added last month and unemployment rate declined to its lowest since February 2009.
The Fed released a report late last November showing that economy grew in 11 of 12 districts due to gains in manufacturing and consumer spending. The Fed does not feel complacent with this modest surge in the economy as they consider more easing measures to monetary policy. The Federal Open Market Committee will meet this month in Washington to discuss whether to try new actions to lower borrowing cost. The policy makers will publish projections for federal funds rate and forecasts for economic growth, inflation, and unemployment.
On the other hand, the residential real estate market remained at low levels, with the rental market tightening in some areas. Most businesses also borrowed money for commercial mortgages.
Moreover, more consumers are borrowing money. “Credit increased by $20.4 billion, the biggest jump since November 2001, to $2.48 trillion.” Commercial and industrial loans have also increased to $1.34 trillion.
This continuing progress in the economy is encouraging, but it is still too early to celebrate. The economy seems to recover at a moderate pace in 2012.
1 comment:
In some ways I think that the best sign of a growing economy is the declining news coverage on economic decline. Slow growth, while better than a rapid decline, is harder to provide interesting news on.
Still, I'm glad to see that the economy is indeed slowly heading back up, and we can all only hope that it continues on this trend.
Going back to what we learned in Econ, it's a good sign that consumers are borrowing more money; hopefully that helps send things on a continuing upward trend.
Post a Comment