By Stephen Kaufman
Recent economic indicators offer evidence that the U.S. economy continues to grow at a moderate pace following the global recession that began in late 2007.
On July 31, the U.S. Department of Commerce announced that the U.S. gross domestic product (GDP), which is the broadest measure of economic growth, grew slightly between April and June at an annualized rate of 1.7 percent.
The U.S. Department of Labor released its monthly report on employment August 2, showing that the U.S. economy added 162,000 jobs in July and the unemployment rate fell slightly to 7.4 percent, the lowest it has been since December 2008.
Alan Krueger, chairman of the White House Council of Economic Advisers, said the employment report “provides further confirmation that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.”
“It is critical that we remain focused on pursuing policies to speed job creation and expand the middle class, as we continue to dig our way out of the deep hole that was caused by the severe recession that began in December 2007,” Krueger said in an August 2 press release.
The Labor Department data shows that the U.S. economy has added private sector jobs for 41 consecutive months, and Krueger said that during that period a total of 7.3 million jobs were added. He said that so far in 2013, the economy has added 1.4 million private sector jobs.
The report indicated increased hiring in sectors such as retail, trade and professional services, with manufacturing and construction essentially unchanged.
The U.S. economy is a crucial engine for growth in the global economy, and movements in its GDP, international trade levels, employment and monetary policy are closely monitored by world governments and international financial markets. World currency markets also monitor U.S. economic activity because the U.S. dollar acts as the reserve global currency, underpinning the 24-hour-a-day foreign exchange market that links to the flow of global investments.
The latest GDP figure of 1.7 percent annualized growth is higher than expected after mandatory federal spending cuts, known as sequestration, began to take effect in April. It also is an improvement over the previous period covering January through March, which had been revised lower to 1.1 percent from 1.8 percent.
However, the employment report of 162,000 new jobs in July was slightly lower than the 180,000 anticipated by economic experts.
Both economic indicators are important as the U.S. Federal Reserve decides when it plans to scale back its current stimulus program.
In response to the 2007–2009 financial crisis and recession, the Fed cut the official interest rate it pays to banks to effectively zero percent and has purchased more than $2.5 trillion in mortgage and Treasury debt. The Fed plans to continue purchasing $40 billion in mortgage-backed securities and $45 billion in Treasury securities each month until the U.S. unemployment rate, now at 7.4 percent, improves to 7 percent.