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Local Business

U.S. Economy Is Steady As She Goes

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Did your stocks lose 15 percent of their investment value in last December’s United States market drop—the worst month since 1931’s Great Depression—even before a record single-day loss in early 2019?  Well, don’t panic.

The Federal Reserve Bank of Chicago’s economic forecast indicates no signs of a downturn, with inflation below the target rate of 2%.

Despite the stock market’s recent volatility, America’s economy—or Gross Domestic Product (GDP)—grew by more than 3% in 2018, 2.8 million new jobs were created in the past 12 months (with another 304,000 in January), the unemployment rate fell to 4.0% and energy prices for oil and natural gas remain below their historical norms.

Manufacturing employment increased by 261,000 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 similar to the rest of the country.

While the Midwest economy is growing in-line with the national economy, here in Illinois employment growth is below the national average and the unemployment rate is at 4.2%.

Wages and benefit cost continue to increase at a moderate rate, but slow productivity growth over the past nine years due to the weak pace of real private nonresidential fixed investment is the reason that strong employment growth has not translated into even higher wages.

Historically-low energy prices continued to fuel light truck sales (pick-ups, SUVs, vans, etc.), which grew by 7.4% in 2018, while light vehicles sales fell by a stunning 13% and sales of alternative powered vehicles remained insignificant.

The past decade of recovery from the Great Recession has been steady, but below 3% annually, as compared to 4.3% following the 1081-82 and 1974-75 downturns, with housing starts mirror the gradual recovery at some 1.2 million per year.