So, did you lose three to fourth months of earnings in the recent United States stock market drop and then gain most of it back days later?
Despite the stock market’s recent volatility, America’s economy—or Gross Domestic Product (GDP)—grew at a near-trend 2.5% in 2017 versus the 3% standard, 2.1 million new jobs were created in the past 12 months (including 200,000 in January), the unemployment rate fell to a below-norm 4.1% and energy prices for oil and natural gas remain below their historical norms.
Two factors driving GDP are labor force growth (often driven by growth in immigration) and productivity gains as a result of better equipment, improved processes, greater capital investment or a more-skilled workforce.
Manufacturing employment increased by 186,000 workers over the past 12 months, thanks in part to Midwest job growth, and the Federal Reserve Bank’s Midwest Economy Index (MEI) manufacturing component is both above trend and doing better than the rest of the country.
While the Midwest economy is growing in-line with the national economy, here in Illinois employment growth is well below the national average and the unemployment rate is at 4.8%.
While employees working part time for “economic” reasons is at a near-norm 3%, nearly one of every four full time job seekers has been unemployed for six months or more.
Wages and benefit cost continue to increase, but at a slow rate due in part to slow growth in productivity stemming the weak pace of real private nonresidential fixed investment.
Low energy prices fueled light truck sales (pick-ups, SUVs, vans, etc.), which grew by 5% in 2017, while light vehicles sales fell 1.4% and sales of alternative powered vehicles remained insignificant.
The recovery from the Great Recession has been slow, but steady at around 2.2% average annualized growth, as compared to 4.3% following the 1081-82 and 1974-75 downturns.
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