5 economic signs to be thankful for
November 02, 2011
When you sit down to Thanksgiving dinner this year, you should have more to be thankful for than just the drumsticks and stuffing in front of you. Hard as it may be to believe, there is some good economic news this Thanksgiving.
Here are five things about the economy you can be thankful for:
1. Healthy job markets -- at least in some states
At 9.1 percent, the national unemployment rate is too high. In fact, this is probably the single worst problem with the economy right now. Unemployment directly inflicts hardships on families, and it also starves the economy in general of the demand that would be created by those missing paychecks.
But the striking thing about the unemployment picture is how different it is from state to state. Unemployment ranges from a low of 3.5 percent in North Dakota to a high of 13.4 percent in Nevada, and in 14 states the unemployment rate is below 7 percent. The areas of strength indicate that the economy is not universally weak across the country, and that job seekers who are willing to relocate do have options.
2. A hint of economic momentum
There is so much discussion of the possibility of a double-dip recession that it would easy to get the impression that the economy is sliding backwards. In fact, its growth rate is actually accelerating. The advance estimate of third-quarter Gross Domestic Product showed the economy growing at an annual rate of 2.5 percent after inflation.
This is the second consecutive quarter of improvement, following a 0.4 percent growth rate in the first quarter, and a 1.3 percent growth rate in the second quarter. The advance estimate is subject to change, so look for the next estimate of third-quarter GDP growth to be released a couple of days before Thanksgiving. If that 2.5 percent figure holds up, it will suggest that the economy is escaping the threat of recession.
3. Export growth
Exports have grown faster than imports in three of the last four quarters. With domestic demand weak, one way for the U.S. economy to get moving again would be to tap the world's faster-growing economies through exports.
4. Businesses are starting to spend
The confidence of business leaders is one of the keys to turning the economy around. After all, until business managers are confident, they will be reluctant to hire, and without that job growth, sources of new demand will be limited.
So it is a good sign that non-residential investment growth has been accelerating, from an annual rate of just 2.1 percent in the first quarter, to 10.3 percent in the second quarter, and 16.3 percent in the third quarter. If business leaders are confident enough to invest in plants and equipment, they may soon be confident enough to start adding jobs.
5. Debt is becoming manageable
One of the root causes of the last recession and the economic weakness that followed was the excessive levels of debt held by American consumers. While sluggish spending in recent years wasn't good for the economy at the time, it has helped Americans get more of a handle on their debt burdens.
Overall consumer debt has declined since 2008, and Americans have slashed credit card debt in particular in recent years. The impact of this has been compounded by low interest rates. While low current interest rates are hurting savings accounts and other deposit products, they have helped bring the ratio of debt payments to disposable income down to the lowest level since 1994.
These bright spots don't mean that the economy doesn't still face serious obstacles. However, since those obstacles seem to get constant attention, it is worth acknowledging the nice things too -- particularly when it's time to give thanks.
