While total U.S. non-farm payroll employment grew by an impressive 288,000, and the unemployment rate declined 0.4 percent from March to 6.3 percent in April, employers do not feel comfortable raising wages for those they employ.
Midland, Michigan (PRWEB) May 21, 2014
U.S. first-quarter economic growth came “within an eyelash of signaling a recession,” according to the most recent edition of Northwood University’s Monthly Economic Outlook.
“Despite news reports touting increasing economic recovery, it’s hard to believe the U.S. economy is picking up its pace, at least relative to the fourth quarter of 2013,” notes the report’s author, Timothy G. Nash, the university’s vice president for Strategic and Corporate Alliances and the Fry Endowed Professor in Free Market Economics.
“To complicate things further, many economists now feel that when revised figures for the first quarter of 2014 are released, U.S. gross domestic product (GDP) will be adjusted downward into the negative range, largely based on concern over business inventories, signaling that growth might not be as robust as some think,” says Nash, who notes that J.P. Morgan Chase, Macroeconomic Advisors and Barclays Capital predict a first-quarter contraction of -0.8 percent, -0.7 percent and -0.6 percent, respectively.
This latest edition of the Monthly Economic Outlook not only examines the U.S. economy at a macro level but also reviews employment statistics and the consumer confidence index and provides an outlook of the automotive industry, one to which the university has close ties through its Automotive Marketing and Management and Aftermarket Management degree programs.
As Nash notes in the current report, news is mixed on the U.S. employment front.
“While total U.S. non-farm payroll employment grew by an impressive 288,000, and the unemployment rate declined 0.4 percent from March to 6.3 percent in April, employers do not feel comfortable raising wages for those they employ,” Nash says. “As a result, average household take-home pay has declined through the recession and recovered to just $51,000 in 2013 from $55,627 in 2007, adjusted for inflation. The result? Declining middle class incomes, which now officially lag slightly behind those in Canada.”
The report also cites an April drop in the Consumer Confidence Index and takes notice of rising gas prices as markers of still-trying current economic conditions. Despite general economic challenges in all sectors, the U.S. auto industry, however, seems to be on the upswing, Nash points out in the report.
“Tough times for the U.S. economy or not, the U.S. motor vehicle industry appears to be in the midst of a strong recovery,” Nash says. “Sales of new automobiles, light trucks and SUVs should surpass 16 million 2014, building on positive growth since 2010. What’s more, wages in areas ranging from motor vehicle parts manufacturing and gasoline stations to tire and automobile dealers saw average increases annually by just less than 2 percent since 2004, while employment in this sector has increased 8.8 percent since 2009. That’s a total of 4.2 million employed at the end of 2013.”
Nash predicts that the U.S. economy will return to 3.5 to 4.5 percent annual economic growth when “sound fiscal and tax policy” are reintroduced.
“In the meantime, let’s be grateful for the strong recovery in the motor vehicle segment of our economy,” he says.
To review the Late April/Early May 2014 Northwood University Monthly Economic Outlook, visit http://www.northwood.edu/documents/about/Outlook/NUEconomicOutlook_042014.pdf.
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