To The Editor:
Cranes clutter the skyline along northern Virginia. Tables in the better restaurants on the west side of Los Angeles can be booked without Hollywood connections. In places, America shows clear signs of returning to a kind of economic normality.
Not long ago, a double dip into recession seemed possible. On November 22 bureau of economic analysis revised its estimate for GDP growth in the third quarter down, though still to 2% annual rate, from the earlier reported 2.5%. According to another measure of output, gross domestic income, growth was only barely positive in the second and third quarters of the year. Yet an improved outlook for release in the future is now showing up all over the economics.
America’s trade deficit declined the third month running in September, thanks to rising exports. Industrial production rose strongly in October. Mortgage delinquencies in foreclosures continue to kick down. The microphone occupied homes remains weak, but construction of multi-family residential units which are attractive to renters may end the year over 50% from 2010. Residential building improvements are touching record highs.
In these improved economic conditions are helping to boost confidence. University of Michigan’s index of consumer sentiment has risen sharply since August. In October, growth in personal incomes accelerated. Consumers are feeling quite a bit perkier. Car sales in October to their highest level since February and are projected to recover to pre-financial crisis levels in November. Retail sales were up more than 7% in October from a year before.
The key question has long been whether growth will translate into new jobs. The signs are encouraging; payroll employment growth has accelerated from early summer, and initial claims of joblessness benefits are dropping. All told, gross domestic product is forecast to rise more than 3% per year in the fourth quarter. Meanwhile, inflation is dropping. A less federal reserve with more room to focus on employment side of its mandate.
Yet the recent good news may be but a brief break in the clouds. The legislative battle over America’s finances, which contributed to America some sort of, is raging again. If Congress fails to extend key stimulative measures, it may settle a vulnerable economy with fiscal drag of more than two percentage points of growth.
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