National Economic Outlook - January 2014

Written By:
Ingo Winzer, President

Local Market Monitor

A big drop in the unemployment rate, to 6.7 percent, has raised expectations for faster economic growth. These days a rate of 5 percent might be considered "full employment" because the nature of the workforce has changed and many people choose not to have steady work, so we're about 2.8 million jobs short, which isn't a lot. After the last recession, the economy recovered 4.5 million jobs in just two years.

A stronger economy so far doesn't show up in the employment figures. The number of jobs in December was up 1.6 percent from last year, on a par with recent performance. Jobs were up 0.7 percent in manufacturing, 2.6 percent in retail, 3.4 percent in business services, 1.4 percent in healthcare, and 2.9 percent in restaurants. Jobs in government were flat.

Jobs in construction were up only 2 percent. This is where the economy so far has fallen short and where faster economic growth is likely to come from. During the building boom of 2005-07 a million "excess" construction jobs were created, so that level isn't our standard, but we're still down a million jobs from a "normal" amount of construction.