I was listening to a local talk radio program while driving home from the office the other day. Caller after caller discussed how bad things were in the economy and even the host, a generally upbeat and optimistic man, sounded down. The sentiment was further expressed in today’s Conference Board Consumer Confidence Survey, which fell to the lowest level since November 2011. How is the pessimism justified?
What consumers say about the economy and what their actions show are different. While expectations are low, annual Retail Sales adjusted for inflation equal the pre-recession peak. Restaurant Retail Sales are at record levels and growing, a sign that consumers feel comfortable enough with their financial situation to spend money on simple luxuries. The rising employment trend suggests even more spending in the future.
Employment has been on the forefront of economic news for much of the past four years. The unemployment rate has been stubbornly high and many perceive jobs are hard to come by. But, in reality, the employment situation is faring better than one might imagine. The private sector has added 3.9 million jobs since employment reached a low in July 2010. In fact, that averages to 164,000 jobs per month. By comparison, during the expansion years earlier this decade, jobs were added at an average of 94,000 per month.
To be fair, there is still a long way for the US economy to go. Housing is well below pre-recession levels; there are still some 13 million Americans unemployed; and Europe still looms large. However, the economy is taking steps to solve these problems. To move a mountain, one must first begin by moving small stones. For three years, we have been chipping away at the mountain of slow economic activity. ITR Economics is predicting a mild recession in 2014, but our long-term outlook is for general growth through 2017. Leading with a positive attitude will be important to navigating the next year-and-a-half of political uncertainty and counterbalancing overly negative news reports.