January 6, 2014
LIA's Monthly Economic Report- January 2014
By: Dr. John Rizzo
The US economy continued to show improvement. The unemployment rate fell to 7.0% in November, while retail sales grew at a robust pace of 0.7%. Consumer confidence is up, and optimism about the job market is at a 5-year high. Housing prices showed strong gains as well. Existing home sales fell, however, a pattern which may reflect rising mortgage interest rates, limited inventory, and tighter credit markets. Inflation remained quite low.
Despite the lack of any inflationary concerns, the Federal Reserve elected to taper its economic stimulus program, reducing its bond purchases to $75 billion in December, down from $85 billion. Fortunately, the financial markets and economy withstood this economic policy change well. Most of the economic news regarding the economy was favorable, and the stock market reached record levels in December.
The unemployment rate fell to 7.0 percent in November on higher than expected hiring of 203,000 workers. This is the lowest unemployment rate in five years. Moreover, the labor force participation rate rose as did the average length of work. Jobless claims during the third week of December fell by 42,000 over the prior week, to 338,000. Although jobless claims have moved higher since September, the level is still consistent with growth in jobs.
The US economy increased jobs at an average monthly rate of 204,000 from August through November. This compares quite favorably to the more sluggish average monthly growth of 159,000 jobs from April through July. Moreover, many of these new jobs were in higher-paying industries. Construction companies created 17,000 jobs and manufacturers added 27,000.
And improvements in consumer confidence about hiring bode well for continued jobs growth. Data from the Conference Board indicate that optimism about the job market is at a 5-year high.
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