SF FedViews

The unemployment rate fell to 8.3% on a seasonally adjusted basis in January, down 0.6 percentage point in the past three months alone. The U.S. Bureau of Labor Statistics (BLS) incorporated updated annual population estimates in data from the survey of households, which is used to calculate the unemployment rate. However, it concluded that these revisions had little effect on the unemployment rate. The updated population estimates did result in an upward revision of nonfarm employment by 266,000 jobs in December 2011 on a seasonally adjusted basis. Initial claims for unemployment insurance also suggest that the labor market is gradually improving. […]

The number of employees on nonfarm payrolls rose by a seasonally adjusted 200,000 in December, according to the Bureau of Labor Statistics. Private-sector payrolls gained about 212,000, while state, local, and federal government payrolls fell by about 12,000 jobs. The increase in nonfarm payrolls was somewhat higher than the average over the past several months, but nevertheless below the rate of job growth in a typical recovery. Even in 2004-07, payrolls grew at a substantially stronger rate than at present. Moreover, the total number of employees on nonfarm payrolls remains about 6.1 million workers fewer than at the start of the […]

Incoming data have generally been better than expected over the past month, suggesting that the U.S. economy continues to grow at a moderate rate. Factors that held growth back in the first part of the year, such as the supply chain disruptions that followed the Japanese earthquake and tsunami in March, have largely dissipated. However, the rapidly evolving European debt crisis represents a significant downside risk to the U.S. growth outlook. The labor market is slowly improving. Nonfarm payroll employment expanded moderately in November, posting a gain of 120,000 jobs, according to the U.S. Bureau of Labor Statistics (BLS). In addition, […]

The economic recovery is proceeding at a subdued pace, with substantial and persistent resource slack and low underlying inflationary pressures. Businesses have been slowly but steadily hiring since early 2010. The economy has recovered about 2¼ million of the 8¾ million jobs lost in the recession. Private businesses have increased employment by about 2¾ million jobs, while federal, state, and local governments have reduced employment. Household net worth fell sharply during the recession, reflecting declines in home and equity prices. These balance sheet changes have prompted households to save more rather than spend. During the recession, the personal saving rate rose […]

Recent data have been somewhat better than expected, helping ease concerns that the economy may be stalling. Payroll employment rose by 103,000 in September. At the same time, payroll data for July and August were revised up by an average of about 50,000 jobs per month. So it now looks like the economy added roughly 96,000 jobs per month in the third quarter. However, the unemployment rate remains stuck at 9.1%. Moreover, initial claims for unemployment insurance are still hovering around the 400,000 level, which suggests little improvement in the unemployment rate in the near future. Orders for nondurable goods excluding […]

Revisions to second-quarter GDP showed that the U.S. economy grew at a 1% rate, down from the initial estimate of 1.3% reported in July. The change was more than accounted for by downward revisions to net exports and inventories, which tend to be volatile from one quarter to the next. Some of the more stable components of GDP, such as consumption and business investment in equipment and software, were actually revised upward, which provided a bit of a silver lining to the report. In addition, the March Japanese earthquake and tsunami disrupted U.S. production in the auto and a few other […]

Recent economic news has been disappointing, confirming that the economy has been growing much less quickly than was expected earlier in the year. Although the slowdown is expected largely to be temporary, there are reasons to believe the underlying recovery has lost some momentum. Real personal consumption expenditures fell in May and are expected to be flat for the second quarter. In part, the weakness in consumer spending owes to temporary factors. These include the run-up in food and energy prices, which strained consumer pocketbooks, and supply chain disruptions related to the earthquake in Japan, which notably affected the auto industry, […]

GDP grew at a 1.8% annualized rate in the first quarter of 2011, a significant slowdown from the fourth quarter of 2010. Several temporary factors helped push down first-quarter GDP growth. Data released in recent weeks suggest that this sluggishness will persist longer than initially anticipated. We now forecast second-quarter GDP growth will come in at around a 2½% annualized rate. But growth should rebound in the third quarter. We expect GDP to expand at an annualized 3½% rate in the second half of the year and to continue to strengthen throughout 2012. Among the temporary factors that have pushed down […]

GDP growth in the first quarter of 2011 came in at a disappointing 1.8% annualized pace, down from 3.1% in the fourth quarter of 2010. However, there is reason to believe that this slowdown is transitory. Our forecast projects moderate growth of around 3% in the current quarter and close to 4% in the second half of this year. A number of the factors contributing to the first-quarter slowdown in growth are expected to be either one-off declines that won’t be repeated or shifts in spending that should lead to paybacks going forward. Among the latter is a temporary drop in […]

Much of the recent economic news has been disappointing, with notably weaker data for consumer spending, business investment, and government purchases. Over the past two months, our forecast for first-quarter real GDP growth has been revised down by over a percentage point to an annual rate of less than 2%. In addition, the list of headwinds that could potentially hold back the economic recovery has grown. In particular, higher gasoline prices will sap household income. Crude oil prices have jumped because of heightened geopolitical risk in North Africa and the Middle East and greater projected demand for fossil fuels in the […]