April 5, 2013

Economy not quite back to full health

Some vital signs have recovered from the recession, others not so much.

The Associated Press

(Continued from page 1)

GDP: America's economy is producing more goods and services than before the recession began. The U.S. gross domestic product, the broadest gauge of production, regained its previous peak by the end of 2011.

WHAT'S NOT BACK

Total jobs: The United States still has many fewer jobs than in December 2007. The recession eliminated 8.7 million. Since then, 5.7 million jobs have come back, leaving the economy 3 million short. And the population of Americans 16 and older has grown by 13 million since then. As a result, a much smaller proportion of people are either working or looking for work than before the recession. The labor force participation rate – the percentage of adults with a job or seeking one – has sunk from its pre-recession level of 66 percent to 63.5 percent in February. That matches a 30-year low.

Unemployment rate: When the recession began, unemployment was 5 percent. Now, it's 7.7 percent. Probably no figure better illustrates the downturn's lingering damage. The unemployment rate is well below the recession's peak of 10 percent in October 2009 but far above the 5 percent to 6 percent range associated with a healthy economy. Twelve million people are unemployed. Yet that figure doesn't include 2.6 million people without jobs who have stopped looking for one. An additional 8 million work part time but want full-time work. Combining all those groups, 22.6 million people are either unemployed or "underemployed." They represent an underemployment rate of 14.3 percent, down from a peak of 17.1 percent in April 2010.

Housing: The housing market has been recovering for about a year but still hasn't reached normal levels. Previously occupied homes were sold in February at a seasonally adjusted annual rate of about 4.98 million. An annual rate of about 5.5 million would be healthy. In the recession, sales had bottomed at 3.8 million. And last month, builders began work on a seasonally adjusted annual rate of 917,000 homes. That's way up from a recession low of 478,000. But it's still far from a healthy annual rate of roughly 1.5 million. Prices have risen nearly 9 percent since bottoming in March 2012, according to the Standard & Poor's/Case-Shiller index, but they remain 29 percent below their pre-recession peak. Still, housing differs from other sectors: Its peaks occurred during a housing bubble that eventually burst. Few expect or even want prices to return to those levels soon. Most economists welcome the steady but modest growth housing has achieved in recent months.

• Auto sales have nearly returned to where they were. Americans bought cars at an annual rate of nearly 16 million in December 2007. Sales plunged to 10.4 million in 2009. In March this year, the annual sales pace was 15.3 million. The rebound has stimulated hiring and restored the once-bankrupt General Motors and Chrysler to health.

• Industrial output: U.S. factories aren't back to their pre-recession peak of output. But they're getting closer. Production was about 5 percent lower in February than in December 2007, according to the Federal Reserve. The Fed also tracks industrial output, a broader measure that includes mining and utilities. That figure is just 1.8 percent below its pre-recession peak.

 

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