National Economic Outlook - May 2015

Written By:
Ingo Winzer, President

Local Market Monitor

Now that the economy is growing at a rate that seemed impossibly high a couple of years ago, we may wonder if this is just a rally with short legs - maybe goosed by short-term events like cheaper energy? - or evidence of structural growth that has fundamentally changed for the better. After all, the apparent strength of the economy just before the recession was fueled by consumers fecklessly spending money they didn't have - why should we be smarter this time around?

The job numbers suggest that our economy is adapting to new conditions and that we can therefore expect the current level of growth to continue for a while - until some unexpected shock hits the system, as it always does. The bulk of the 8 million new jobs added to the economy in the past 3 years have been in fields that aren't very susceptible to energy shocks or stupid government policies or foreign markets or financial chicanery: business services, retail, and healthcare. This is quite a change from an American economy that used to depend on manufacturing, construction, and government spending. Part of the change is just aging baby-boomers - but they'll keep aging for a while.

The number of jobs in April was up 2.2 percent from last year, while unemployment was 5.4 percent. Much like the situation in previous months, jobs were up 5 percent in construction, 1.6 percent in manufacturing, 2 percent in retail, 3.6 percent in business services, 2.7 percent in healthcare, and 3.7 percent at restaurants. Government jobs were flat.