Labor market is fundamentally strong
Unemployment in the U.S. was 4.7% in February 2017, down from 4.9% a year earlier, according to the Bureau of Labor Statistics (BLS). The recent peak year for unemployment was 2010, with 9.6% unemployment.
“The jobs market is strengthening and we are near full employment,” said Moody’s Analytics.
In February 2017, average weekly earnings increased by 2.5% from the same period last year, to US$897.50.
The U.S. economy grew by 1.6% in 2016, down from 2.6% growth in 2015 and the lowest level since 2011, according to the U.S. Bureau of Economic Analysis. The country’s sluggish economic growth was one reason behind President Donald Trump’s election. Trump promised to double economic growth through an ambitious stimulus program featuring tax cuts, deregulation and higher infrastructure spending.
The world’s largest economy is expected to grow by 2.2% this year, and by 2.1% in 2018, according to the IMF.
The budget deficit widened to 3.2% of GDP in 2016, after reaching an eight-year low of 2.5% of GDP in 2015, according to the Congressional Budget Office (CBO). Despite this, the deficit remains far lower than the deficit of 10.1% of GDP recorded in 2009.
The deficit is expected to increase in coming years as President Trump and congressional Republicans plan to cut taxes and boost infrastructure spending.
Consumer prices continue to rise. In February 2017, the nationwide inflation rate stood at 2.7%, up from 2.5% in the previous month and the highest level in five years, according to the US Bureau of Labor Statistics. Overall inflation is expected to be 2.3% this year, from 1.2% in 2016, 0.1% in 2015, 1.6% in 2014, 1.5% in 2013, and 2.1% in 2012, according to the IMF