National Economic Outlook - July 2013

 

Written By:
Ingo Winzer, President

Local Market Monitor

 

Better estimates of Gross Domestic Product show that the US economy grew 1.8 percent in the first quarter, despite a negative 1 percent drag courtesy of the government. Consumers did their part, with 1.8 percent growth, businesses added 1 percent in the form of equipment, inventories and construction, which would have yielded a solid 2.8 percent growth if government had just kept spending flat.

Maybe we can only cut government spending when everything else is already going poorly, so we all suffer the pain.

 

Notably missing in GDP so far is any meaningful pickup in construction. But that may soon change because the soft pickup in housing demand will shortly run up against the hard fact that very little was built in the last five years. The fact that home prices have bottomed out in most local markets shows that very little excess inventory is left.

 

An encouraging sign is the 3 percent increase in construction jobs in the past year. Two million construction jobs were lost in the recession - that's a lot to make up for - but 200,000 reappeared in the last 12 months.

Overall, jobs since last June grew 1.7 percent. In addition to construction, there were gains in retail trade, 2.1 percent; business services, 3.2 percent; health care 1.9 percent; hotels and restaurants, 3.4%; and even finance, 1.5 percent. But jobs were almost flat in manufacturing and government.