The US economy is technically in EXPANSION.
As Mitsubishi Financial’s Ellen Beeson Zentner points out in a morning note, with yesterday’s GDP report, we’re officially in expansion, the real size of the economy having passed the pre-crash high.
Let us hope this is reality, while respecting that unemployment will ratchet downward to pre-crash levels only slowly and over the next several years.
Why such a slow recovery for the unemployed?
- Companies have learned to grow with fewer employees
- Most of firms’ growth has occurred in overseas markets (for example, GM now builds more cars in China than in the United States)
- Financial institutions are whole again not for lending, which allows more hiring through small business, but from investments in Treasuries and stocks
- Traditional sources of employment growth are stagnant still: construction and related industries that will recover only after the foreclosure inventory is gone over the next five or so years
Nonetheless… this chart above is certainly good and welcome news as personal recoveries cannot begin without growth starting somewhere.