Home Business U.S. Economy Growth Slows To Standstill Even As Economy Adds Jobs

U.S. Economy Growth Slows To Standstill Even As Economy Adds Jobs

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It’s always difficult to make sense of economic indicators. This week, reports indicated that the American economy added 288,000 jobs in April, the strongest job growth since January 2012. Before traders and economists had a chance to even pat themselves on the back, however, reports rolled in that economic growth in the first quarter had come to a stand still, expanding by only .1%.

Despite the strong jobs growth, indexes have been treading water and even losing a few points. Usually, strong jobs growth results in a large bump in stock markets, but this time around indicators pointing to a stalling economy quickly subdued optimism.

Jobs: Unemployment down but rate doesn’t tell full story

Unemployment fell sharply to 6.3%. This rate marks the lowest unemployment rate since September of 2008, suggesting that the American economy may indeed be recovering. Increasingly, the American economy looks set to reach pre-crisis levels with total national wealth having reached an all-time high, and the stock market also soaring into new heights.

Retail sales have also grown as shoppers look ready to finally shrug off a long and cold winter. Retail sales climbed 1.1% in March, the biggest gain in over 18 years. March retail sales were up 3.8 percent when compared with the same period a year ago. It should be noted, however, that both December and January retail sales had actually fallen, so this could simply mark a recovery and stabilization.

Before you get swept away by what might appear to be overwhelming good news, it’s important to note that the size of the labor force plummeted by an astounding 806,000 jobs. Average hourly earnings also didn’t grow in April, and indeed over the past year they are up only 1.9 percent. These negative suggest that while labor markets may be stabilizing, there are still several severe underlying issues.

Further, while consumer spending up up 3 percent, a closer look at the numbers reveals that this bump was largely due to a 4.4% increase in spending on utilities. This increased spending on utilities appears to have been due to the especially harsh winter that America is now recovering from.

Fed will continue with tapering plans

The barrage of good news means that the Fed will be staying the course with its tapering plans. Under the plan,t he Fed will cut back $10 billion dollars worth of new cash injections every month. This should result in a stronger American dollar and rising interest rates, which in turn could put a crimp on emerging markets.

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