The recession is ending and the US economy is finally growing again.
That’s the message implicit in the Federal Reserve’s latest survey of businesses around the country, which found economic activity stabilising or improving in most regions. Economists warn the expansion is fragile and will have staying power only if consumers start spending more money. Rising unemployment that keeps Americans cautious could make for a plodding recovery in the months ahead.
The Labour Department will report on Thursday the number of new jobless claims filed last week, which could indicate whether the incipient recovery is slowing the pace of layoffs. Wall Street economists expect that first-time claims for unemployment insurance benefits fell to a seasonally adjusted 560,000 from 570,000 the previous week, according to a survey by Thomson Reuters.
Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies’ willingness to hire new workers.
While the figures are volatile, first-time claims have trended downward in recent months. Initial claims topped 600,000 for most of this year, until falling below that level in early July. The total number of people receiving benefits, meanwhile, is expected to drop by about 30,000 to 6.2 million. The figures on so-called continuing claims lag initial claims by a week. All but one of the Fed’s 12 regions, meanwhile, indicated economic activity either was “stable,” showed “signs of stabilisation” or had “firmed,” according to the Fed’s survey.
Businesses in most Fed regions said they were "cautiously positive" about the economic road ahead. The survey, known as the Beige Book, does not include precise figures.
The survey’s findings will figure into discussions when Fed Chairman Ben Bernanke and his colleagues meet September 22-23. The Fed is expected to keep interest rates at record lows, probably for some time, to help nurture the recovery.
‘We’ve pulled economy back’
US President Barack Obama said the “bold and decisive” steps taken by his administration has pulled US economy back from the brink.
“This nation was facing the worst economic crisis since the Great Depression. We were losing an average of 700,000 jobs per month. Credit was frozen. And our financial system was on the verge of collapse,” Obama told the US Congress wherein he called for health care reforms.
Admitting that a full and vibrant recovery was still many months away, the President vowed to continue with the steps to strengthen the economy.