Consumers eager to spend, economy improves
By Josh Boak, AP
WASHINGTON — There’s a good reason the U.S. economy is impressing the world right now despite a slowdown in the final three months of 2014: In a word, steadiness.
Companies have been hiring at healthy rates for the past year. Layoffs hover near historic lows. Auto sales are strong. Gas prices have sunk. Congressional budget fights have faded. Americans are increasingly confident.
All that fed a surge of consumer spending last quarter, offsetting weaker business spending caused in part by a pullback by oil drillers and a frail global economy.
The U.S. economy as a whole expanded at a 2.6 percent annual rate, the government said Friday, down from a sizzling 5 percent gain the previous quarter. Yet consumers signaled their optimism by spending at the fastest rate in nearly nine years.
“This hasn’t changed my picture on the strength and resilience of the U.S. economy,” said Scott Anderson, chief economist at the Bank of the West. “Almost all the drivers of consumer spending are pointing in the right direction.”
Nearly six years into the recovery from the Great Recession, the economy has finally gone from straining just to grow to posting consistently solid gains. The gains have come even though many households continue to struggle without much of a financial cushion. Nearly half say they spend all their income, go into debt or use savings to meet their expenses, a new analysis by the Pew Charitable Trusts has found.
In addition, a surging dollar is denting the earnings of U.S. companies that operate overseas. And energy firms have been hurt by plummeting oil prices, and as a result companies in the Standard & Poor’s 500 index are expected to report weak profit growth.
But collectively, consumers and investors are showing renewed faith in the economy.
On Friday, the University of Michigan said its sentiment index found that U.S. consumers are more confident than they’ve been since 2004. Also Friday, the government said wages and benefits are ticking up, a sign that steady job gains may be compelling employers to pay a bit more.
Most indicators suggest that the economy has surpassed a psychological threshold that has made businesses more comfortable with hiring and infused consumers with more enthusiasm.
“Psychology has been a big contributor to the improved level of performance in the United States,” said Carl Tannenbaum, chief economist at the bank Northern Trust.
At a time when Europe, Asia and South America face deep anxieties, the U.S. economy’s greatest strength might be its remarkable sturdiness.
The consensus expectation is that the U.S. economy will expand a solid 3 percent this year, well above the recovery’s 2.2 percent annual average. This has made U.S. stocks and Treasurys comparably attractive — havens from the risks from Europe’s prolonged slump, collapsing oil prices, China’s slowdown and Japan’s struggles to stave off recession.
Yet the U.S. economy still has additional room to continue expanding. In current dollars, the median household income of $54,417 remains about $1,800 below its late 2007 levels, according to Sentier Research. More than 5 million households owe more on their mortgages than their homes are worth, according to the real estate data firm CoreLogic.
Because the U.S. economy is rebuilding its core without relying heavily on mortgages, credit cards and other debt, it has avoided the sharp swings and shocks that can tip an economy into recession.
“You’re getting solid consistent growth,” said John Canally, chief economic strategist at LPL Financial. “If you have a slow recovery, you don’t build up the excesses that ultimately cause a recession.”
The gourmet hamburger chain BurgerFi plans to nearly double in size from its more than 60 restaurants this year. More consumers are upgrading from fast food, and the chain can choose from towns and cities “where the economic train has been rolling along at a pretty rapid pace,” said Corey Winograd, CEO of the Florida-based chain.
If all goes as planned, BurgerFi will account for 2,000 new jobs this year.
Investors are still trying to adjust for this newfound steadiness. The rush of foreign money into U.S. Treasurys has cut the yield on 10-year note to about 1.67 percent from 2.9 percent a year ago. A result is that it’s now cheaper for companies and homebuyers to borrow in ways that nurture growth.
During 2014, employers added an average of 246,000 jobs a month. That figure has remained above 200,000 for the past 11 months and has helped whittle the unemployment rate to 5.6 percent from 6.7 percent 12 months earlier. Given that applications for unemployment benefits have stayed consistently below a weekly average of 300,000, most economists think hiring should grow at a pace similar to the 2014 levels.
Wages have yet to grow significantly. But all those new jobs mean that the U.S. economy entered 2015 with an extra $126 billion in combined annual paychecks. That money has trickled into restaurant dinners, new cars and other goods and services.
Sales of new vehicles climbed 6 percent to 16.5 million last year, according to Autodata Corp. Car buying is poised to eclipse 17 million for the first time in a decade. Spending at restaurants and bars improved 5.8 percent last year, the government says.
Cheaper energy has been a gift for consumers, who account for nearly 70 percent of all U.S. economic activity. The Energy Information Administration projects that an average U.S. household will save about $750 this year on gasoline.
At the same time, Tannenbaum of Northern Trust cautions against becoming too complacent if consumers begin to fear that the economic woes abroad threaten the U.S. job market or financial markets.
“Psychology could also be the avenue through which some of the world’s uncertainties drag us back to growth that’s a bit less desirable,” he said.
Consumer sentiment is inversely related to the price of gasoline.
Im sure all the obama haters are trying to come up with some reason this information cant be good. Foxnoise hates giving credit where its due, especially if obama had something to be proud of. Notice the silence from justanass and dog…..
im sure they will come up with some scathing remarks tho……
Nature-
this is good news. Please educate us why obama should get the credit?
SC Tahoe, if Obama is held responsible by many conservatives for the collapse of the US economy in 2008 (BEFORE he was sworn into office!), it only follows that your pretzel logic would find that he should take no credit for the recovery DURING his 6 years in office.
Many sheepish conservatives that toe the party line seem to view history and FACTS with blinders on!
Nobody has said anything bad, so you have to post saying that you assume the people you dislike will eventually say something bad. Why not wait till someone DOES say something before you get snippy?
Such a crummy attitude.
I have never heard anyone blame obama for the collapse of the economy. I was asking why he should get credit for the recovery? You know…FACTS?
Well SC here are just a few presidential actions that have aided in the recovery:
The American Recovery and Reinvestment Act
Ended the previous policy of offering tax benefits to corporations who outsource American jobs
Making more loans available to small businesses
Startup America
Etc, etc, etc.
Well, I’m not so sure the trillions that were spent by this Administration couldn’t have been used better. . . this recession has taken an incredibly long time to come back, and it’s still not great yet.
Out of that stimulus money in Wisconsin…80% of it went to public unions. Right to work states received $266 less per person in stimulus money. In addition, we have the 3rd highest corporate tax rate at 39.1 percent, the highest in the developed world.. Only Chad and United Arab Emirates exceed our rate.
obama’s plan is to increase taxes and spending still more. I don’t think that’s the answer. Reducing tax rates inevitably increases actual revenues by limiting the number of businesses who flee overseas to tax haven countries. Even state to state you can see it. California businesses are leaving for Texas and Nevada, even if you refuse to acknowledge it.
Decreasing taxes gives everybody more money to spend on what they choose to spend on, instead of on what government wants to spend on. Like wars.
Bigger: Let’s not forget his release of five Taliban members (without Congressional approval>see US Constitution) from Gitmo, some have rejoined the other insects to KILL Americans. He wants it closed and now suddenly Cuba wants it back. What a surprise.
Yup, just give them a little rope.., just@ass must be gearing up for something really big…
Aspen, and Taliban prisoners have exactly what to do with our recovering economy?
Way to stay on topic.
Dog, the new taxes Obama is suggesting are targeted at the 1%ers and corporations that have been getting sweetheart deals with over the top tax breaks and pay little or no taxes.
But it’s awfully magnanimous of you, which I’m guessing that you don’t fall anywhere near that category of those types of earnings, to defend legal tax evaders.
And the much of the spending is geared to MUCH needed work on our nation’s infrastructure.
Tell the fifty million on welfare how great it is under this clown show called Insane Hussein. Then take the near 100 million out of the work force and ask the same question. Meanwhile, the world Islamic wars are ever growing, the walk in US border remains open to all who want to do harm and Iran is close to weapons grade, and the band plays on for the cover tune of massive failures and scandals and it is a typical liberal fraud.
Gas. It was a “Prisoner Exchange.” We traded 5 Taliban prisoners at Gitmo for our Sergeant Bergdahl. Prisoner exchanges are as old as history. If Bergdahl had been killed by the Taliban, then you would be blaming the President for it. You can’t continue to butter your bread on both sides.
As for the Economy… Of course it is much better now then in 2009 by most objective standards: Employment, Stocks, Automobile Production, GDP, Debt per GDP, Consumer Confidence etc. Housing is still below the 2007 highs, but that was the Mortgage Back Security Bubble and it will take time.
We are not spending Billions per Month in Iraq. We are not spending Billions per Month in Afghanistan. I also completely agree that both Iraq and Afghanistan need to stand up and go after ISIS and the Taliban respectively; we can’t hold their hands forever. When ISIS came into Iraq last summer, the Iraqis had a 20 to 1 advantage in manpower. Yet, the Iraqis threw down their weapons and bugged out to Baghdad at the first sign of trouble.
As for gas prices… President Obama raised CAFE Standards on vehicles, and manufacturers (35.5mpg 2016/54.5mpg 2025) are making more efficient vehicles.
As for corporate tax rate. Everyone knows from the 2012 Election that the standard rate is set at 39% but with credit, exemptions & loopholes, the real rate is 12.6% at the Federal level and 16.9% with State/Local tax included.
Just@ss still making stuff up. There are 11 million American Families on Relief and 39 % of those families are Caucasian. There were about 156 Million in the workforce at the end of 2014 and there were 154 Million to begin the year 2009. All this while Babyboomers retire.
Keep your pipe full rock, you are smoking Bummer’s green and you are delusional and wrong, the numbers I cite are correct, you are wrong as usual. The welfare numbers and workforce numbers are correct. Your source?
Just@ss. Try to keep your underwear clean.
The US Labor Department along with Office of Family Assistance. Oh, but that requires actual searching and thinking… which you lack.
Why not go to the DNC site? Are you insane enough to believe anything this leftist fraud in DC produces? Try to get someone with above your 6th grade education to read the Wall Street Journal to you someday ignorant clown. You are a joke.
Justanass=paranoid and delusional, just how foxnoise directed him, spread the lies, act like the sky is falling, drink their kool aid get the hook set and they caught another sucker…
Just@ss. I know you are filed with hateful racist bigotry and that you don’t understand Economics (or Math and Science). But, I thought I would try to give you some Economic pointers anyway.
When Gross Domestic Product goes up, that is good because it means more people are working and producing more goods and services. US GDP was $14.3 Trillion in December of 2008 and it was $17.7 Trillion in December of 2014; that’s good.
When Consumer Confidence goes up, that is good because it means more people are wanting goods and services. American Consumer Confidence was about 40% in January of 2009 and it about 90% in December of 2014; that’s good.
When the US Stock Markets goes up, that is good because investors believe that economic activity is expanding. The Standards & Poor 500 was at about 825 points in January of 2009 and it is at about 2025 points today; that’s good.
When the US Dollar has a higher value against the Euro, that is good because people believe that the US Dollar is keeping it’s value. In January 2009 1 Euro cost about $1.43 Dollars, today 1 Euro costs $1.15; that’s good.
When US Unemployment Rates go down, that is a good because it means more Americans are working. In October of 2009 the US Unemployment Rate was 10% and in December of 2014 it was 5.6%; that’s good.
You see, it would be very hard for America, with a population of 320 Million, to have such good Economic activity while loosing 100 Million people out of the work force as you suggested/ranted.
BTY, I don’t smoke.
Hope this helps you… but your prognosis is not that good. You can continue stroking your Flight Suit Bush Doll now. LOL!
I think it is true that 100 million are out of the workforce, but that number includes those that are retired, disabled, not wanting to work and some others that should not count toward those that could/should be employed.
The number that would like to be employed, or should be, is probably greater than the unemployment rate suggests but it is nowhere near 100 million.
This just proves Mark Twain’s observation about statistics.
The economy is healthier than it was, absolutely true. But as pointed out in previous stories, the wealthy have been the beneficiaries, not the lower 50% of incomes.
You can talk numbers all you want. But the best economic indicator was the midterm elections. Do you think those results indicate satisfaction with the economy?
Rock: Bergdahlis a traitor. He doesn’t count.
He’s lucky this warm and fuzzy, out of touch with reality, administration doesn’t court marshal and hang him. I’m sure the families of the brave men killed looking for his pathetic butt would have something to say to Bergdahlis. Nothing good came out of that one sided trade, except for the Taliban gaining five top a$$ wipes back.
The leftist fraud is hiding the implosion coming of the doubling of welfare, which some state has passed fifty million and growing, hide SSI, another few tens of millions, then hide those that gave up looking for work as many as another near one hundred million. Then throw out AP cover articles and state everything is good, unemployment is low, everyone is spending equity out of their homes again as they start to re-inflate. Then ignore the scandals and the world problems of the King’s purposeful disengagement and not preventing or dealing with imminent wars and danger or the open border threat and then liberals hope King Hussein can hide on the golf course for another two years while shopping for mansions.
Parker. When have the “wealthy” NOT been the major beneficiaries of economic upturns (or downturns for that matter). You have to go back 5 or 6 decades.
Voter turnout in the 2014 midterm was the lowest, 36%, since the midterms of 1942, 34%; the youth and Hispanic voters stayed away. Was the last election about economics or yelling EBOLA as loud as possible. (Now everyone is Yelling Measles!)
We have hashed this out before. American “Middle Class” peaked in the late 1960’s. The Top 1% (Wealthy) Peaked in the 1930’s, dropped steadily until the mid 1980’s, then peaked again in 2010. I have not heard any valid economic plan coming from the GOP to help the Middle Class; clearly giving the Wealthy more money does little to help anybody else.
Just@ss says “blah.. blah.. welfare… some state has passed fifty million.. blah.. king… blah… borders… golf…blah”
Ummm, California has the most populists State with 38 Million People. Yes, we get that you hate President Obama and have no idea what you are typing.
Gas. That is your hate filled opinion of Bowe. To my knowledge, Sergeant Bergdahl has not been charged with anything as of this time. I did see a single article that said that he might be charged with Desertion, but that hasn’t happened yet. Be careful casting that first stone Gas, since there were about 3,000 Deserters in 2009… You going to hang them all.
Rock,
First you hashed it out in your own mind!
But anyway, the spread isn’t just at an all time high, the lower 50% in incomes aren’t improving at all! An income gap isn’t so bad if at least the lower incomes were getting some income growth. But they’re not!
Yes, even Obama supporters are so disillusioned with the economy, they didn’t turnout.
So for starters, stop this QE, which is just giving the economy a sugar high. And according to a great story in the far from right-wing PBS, contrary to what’s been reported, it’s still going on. The interest on the over $4T in bonds the Fed already purchased is being used to buy new bonds.
And secondly, per a story here on LTN, cut the regressive taxes that hit poor & middle income people hardest. Things like sales taxes which are used to help pay for things like members of the SLTPD getting paid over $200k/yr. Reverse Robin Hood!
Rock: Not hate filled just calling it like it is. YOUR words are “hate”, not mine. Oh, yes, since he hasn’t been charged by your OUT OF TOUCH WITH REALITY government then it isn’t so. PULLeeeze spare me your dribble. Even if he wasn’t a traitor why would we trade FIVE high level American haters for only one? Your f-ed up pal in DC is a sympathizer and can’t even call them what they are. Pathetic. Your non-leader could take some tips from Jordan. But he hasn’t the huevos at all. Puke that he is.
Gas Says “(Sergeant Bergdahl) lucky… doesn’t court marshal and hang him.” And it is the Military that decides what to charge him with not you. Sorry, but that is hate filled in my book… Pathetic hate. Go pass some Gas Gas.
Parker. When my Grandparents (both sets) lost everything in 1931 to the banks, it took them almost 20 years to recover what they had lost; house, farm, vehicles, wages etc. We have turned things around in 6 years since the collapse of 2008.
Everybody except large hedge fund managers got hit with the housing market drop in 2008. People are still wanting their home values back, don’t hold your breath. 1-2% increase in value is the historical norm.
We have (USA) the 10th largest per capita GDP on the Planet at $53k per year; right next to Switzerland (9th) at $54k. That is a good sign.
As for the voter not showing up. Yes, the Hispanic Voters were told to boycott the Mid-Terms because of the lack of progress on Immigration Reform. The youth vote has only been showing up for Presidential Elections for a number of years now. I was part of the 36% that did vote.
You have been whining and complaining about QE for two years now; Nobody cares about that issue.
Cut the sales tax and make Police live on minimum wage or the wage YOU say; That’s your solution.
How about what Ike did and raise taxes on the Wealthy and build (fix) roads and bridges. Or is Ike a bad President too now.
You’re confusing 200k with being close to minimum wage? Wow! Tough to have a discussion with someone who has that perspective.
And people do care about the continued QE policy. That’s why PBS did a story on the bubble re inflating policy.
But you are correct. We’re America with a strong entrepreneurial spirit! Whichever party is in charge of govt. cannot change that. Thus, we will always have one of, if not the, World’s strongest economies. It’s just that I, and many others, hence the election results, think we could do better for all, and better for the long-term, if we stopped re inflating the bubble.
Parker. What I am saying is that your QE argument is a moot point; means nothing now because people have decided with their wallets over the past six years: Millions of people have invested Trillions of Dollars into US Markets, 3.1 Million new jobs created in 2014 (the most since 1999), Health care inflation is flat, 10 Million American have health insurance now, lowest interest rates in a lifetime or two, States that increased minimum wage are seeing real wage growth, Car makers in full production, inflation low, gas prices stable, etc, etc. America is a safe investment… certainly much better then old “Blue Eyed Putin’s Russia” or many other Continents or Countries.
All this growth has occurred while Barack Obama has been President, while ACA has become law, while Republicans continue to lawyer up, do nothing and yell “foul” from the cheap seats (so to speak). Let’s face it, if Barack Obama was a White Man named John Smith, even Republicans would be licking his boots.
Re. 200k. Tom McClintock makes over $200k per year with full benefits, works less then half the year, and does nothing. At least a Cop on the beat is doing something for the community.
Re. Sales Tax. The GOP Controlled House and Senate could increase and expand the Sales Tax Deduction and perhaps make it a credit for the poor via Tax Law changes, but you and I know that is not going to happen.
We live under the Roberts Rule of Citizens United. And if you know anything about the history of the Montana Copper Kings and the history of money in Montana Politics, that should worry you. QE… ‘eh.
I love when the justification for an absurd salary or expenditure is a childish change of the subject.
Fact: The lower half of incomes are still not seeing their incomes increase. And yet they are burdened with excessive taxes & fees to pay for a bloated and overpaid bureaucracy!
The govt. shouldn’t be playing even more games with the tax code & credits. Just lower the damn tax and see if bureaucrats can eke by with maybe just 200k instead of over 200k, plus benefits?
If QE is so moot, and we’re doing so great, awesome! Then end it! It’s supposedly not necessary cause we’re doing so well anyway. So stop inflating the bubble!
And don’t pull the childish racist card! That’s another silly liberal game of changing the subject. I, and many others, including many non-whites, spoke in Nov. (And I guess when I disagree with a white politician, that means I’m racist against whites?)
Good the economy is growing. It always has throughout America’s History, in spite of periods of recessions. But as the voters illustrated, it’s not as rosy as the Brian Williams media would have you believe.
Oh Park’ed, more opinionated hot air.
As far as changing subject, who cares, certainly not you, babbling about elections and QE on a thread titled “Consumers eager to spend, economy improves.”
Topic:
Real weekly earnings rose in 2014 and are still rising.
5.5 Million new jobs have been created since January 2009; four times more job creation with President Obama then eight years of President Bush.
16 Million Americans have health insurance and the total number of Americans without health insurance has dropped thanks to ACA.
Average Premium costs went down .8%
15 Year Fixed Mortgage rates are a little over 3%; 30 Year rates are just under 4%. Five year auto loans are about 2.5%
Car & Light Truck sales are the highest they have been in 7 years.
Wind & Solar power production is up 241% since January 2009.
Petroleum imports are down 51% since January 2009.
Voters in four States: Alaska, Arkansas, Nebraska and South Dakota, voted to raise the minimum wage and sixteen other States increased their minimum wage January 1st. Meanwhile the GOP does what it does best… nothing.
Poor Rock,
On an article about the economy, you don’t understand the connection to discussing Fed policies. Heck, you think making under 200k means you’ll be making just minimum wage?!
Yes, I will refer you to Fri. cnbc.com, published by the same people as msnbc. Talked about positives and negatives (no wage growth, small labor participation) in the current economy. And if things are so great, then the Fed can and should stop inflating the bubble! Right?!
Considering I caught you outright making something up, (where were all these stories on Fox & Forbes you said existed? Cite the source, that’s your, the claimant’s, job!) you’re credibility is quite questionable to say the least.
But again it says a lot that you don’t the pertinence of discussing Fed policy when discussing the economy!
And at least Brian Williams sort of admits to his error. So you should at least fess up to yours to regain some credibilty. Or where were all these stories Rock? Don’t name call, cite the source!
^^^ from the guy who talks about long term debt without normalizing it for %GDP.
“you’re credibility is quite questionable to say the least.”
You can’t make this stuff up folks. That just happened. If you are questioning someones credibility double check the spelling of at least the sentence you bring it up in.
Misusing your/you’re doesn’t mean the person is stupid, but it is something to be considered in the stupid metric.
Actually duke I am so flattered about your continued obsession with me. When you don’t even have something to add, you’re still obsessed with commenting about me! Wow!
And as far as your obsession with old stories, well, we do have a troubling and high debt in actual dollars, and as % of GDP. Especially when one takes into account obligations that aren’t put on the books.
But Yes, I do not always have the time to proof all the words I type. Had a work obligation that called. When one is trying to make ends meet, without the security of a govt. check, you have to work at all kinds of odd, staggered hours. So I made a typo. I confess! (See, confessing a mistake isn’t so hard.)
Thank You for being so obsessed with me that all you have to comment on this story is how I rushed my typing and confused your and you’re. You got me. Way to add to the dialogue!
Parker. What exactly do you know about a $17 Trillion economy… nothing.
Again, you are lacking between the ears when it comes to using a search engine; Can’t help you there or with your selective ignorance. The economy obviously does better under Democratic Presidents, according to Princeton University, and that research was done in 2013.
And oh, you are so worried about debt, yet still believe Reagan did good job by actually tripling the debt with what you term… economic candy.
Credible is as credible does. I am still waiting for the economy to fail based on your “opinions” over the past few years. Fortunately, the American economy is doing a pretty good via actual Credible objective observation; not opinionated hot air.
In the end, just more useless keystrokes from the Parker troll.
The Earth moves at about 67,000 mph around the Sun… Do you hear it Parker… it is that large “whooshing” sound as the Earth passing you by. LOL!
It would be great to see all of you who constantly bash each other here on LTN actually meet in person. I’d be interested to see how you would react to each other. It doesn’t matter what the article is about, it’s the same people ragging on each other every time. You must have lots of time on your hands. Actually, I’ve wasted to much time typing this….later……..
Rock,
The guy that doesn’t understand the Fed’s impact on the economy, who I caught outright making something up and thus doesn’t understand even basic High School English standards where they teach you to cite sources, (By your standards I can simply state Obama was quoted on MSNBC as admitting he’s failed on the economy. Don’t believe me, look it up.) and when he does cite a source, That Princeton Study, it’s authored by a Democratic Campaign Operative!, name calls?
Wow! Who needs shame anyway?
Parker, again the only thing made up is your bad gas.
I cited thousands of sources and gave you the name of the report to boot; you have to actually read the report (sort of like going to a library), but you are to ignorant to do that Parker.
Throw rocks at Princeton University all you want you “no name” narcissistic blogger. LOL!
ps and S&P hit a new record high again today. So much for your failed economy talking point.
Rock,
You said there ‘all these stories on Fox & Forbes’ about Congress not having any impact on the economy! When I caught you on it you then try to change the subject. Princeton study? You cite it, I point its bias. There you go.
But you made a claim about these stories on Fox & Forbes! I’d let it go, but then you engage in your childish name calling. So fess up that you made it up! Otherwise, that you made something up shows your lack of credibility on this and other stories!
So don’t name call, fess up or where were these stories on Fox & Forbes?
Or, I can just say, Obama even admitted he’s failed, because the lower half of incomes aren’t seeing any improvement! Check it out on msnbc! Obama admits it!
I’ll show you where Rock, once you substantiate your earlier Fox & Forbes claim! Where Rock? Don’t childish name call or change the subject!! High School level English here, cite your source! Where are these stories on Fox & Forbes! I’m calling you out!!