WASHINGTON — Nearly four years after a devastating recession, the U.S. economy and job market are far from a full recovery, but they have made steady progress. Here is an overview of America’s economic health:
The U.S. economy has been adding 196,000 jobs a month this year, up from a monthly average of 179,000 in 2011 and 2012. Given how far it needs to go, the job market is recovering more slowly than people had hoped. The U.S. still has 2.6 million fewer jobs than it had when the Great Recession began in December 2007. At the current pace of hiring, total U.S. jobs won’t reach the pre-recession level of 138 million for more than another year.
Account for population growth, and the jobs ditch is even deeper: Heidi Shierholz, an economist at the liberal Economic Policy Institute, says the economy needs to add 8.6 million jobs, not 2.6 million, to keep up with a rising population.
Unemployment has improved dramatically since peaking at 10 percent in October 2009. But by any normal standard, April’s 7.5 percent unemployment was still a recession-level figure — higher, for example, than it ever got in the short recession of 2001. The Federal Reserve doesn’t expect the unemployment rate to reach a healthy level — 6 percent or lower — any sooner than 2015.
At least unemployment fell last month from 7.6 percent in March for the right reasons: More Americans reported having jobs and fewer reported being unemployed.
A big part of the drop in unemployment the past 3 ½ years has come because people have given up looking for work. If the participation rate were at the pre-recession level of 66 percent, the unemployment rate could have reached 11.3 percent last month.
Consumers, housing and stock markets
Some of the U.S. economy’s fundamentals are looking healthier.
Consumers have shrugged off an increase in their Social Security taxes this year and the budget shenanigans in Washington: From January through March, they spent at the strongest pace in two years. That’s good news because consumers account for 70 percent of U.S. economic activity.
Fueled by near-record low mortgage rates, the housing market has been bouncing back. New-home sales in March were up 18.5 percent from a year earlier. Sales of previously occupied homes were up 10.3 percent. For the first time in five years, homebuilders started work on more than 1 million homes in March at a seasonally adjusted annual rate.
Investors have celebrated rising corporate profits and other good news. The Dow Jones industrial average is up 1,870 points, or more than 14 percent, so far this year, including Friday’s gain.
Europe makes us look good
Across the Atlantic, governments have been cutting spending and raising taxes even more aggressively. The 17 European Union countries that use the euro currency slid back into recession in the fall of 2011 and have been stuck there since.
Eurozone unemployment hit a record 12.1 percent in March, reaching 27.2 percent in Greece and 26.7 percent in Spain.