The American economy regained its footing last quarter, expanding at an annual rate of 2.3 percent amid a better trade picture, growing consumer spending and a resilient housing sector.þþThe rebound in April, May and June was largely expected, after a dismal performance in the first quarter of 2015, when the economy actually contracted slightly.þþBefore the report on Thursday from the Commerce Department, analysts on Wall Street had been expecting to see a growth rate of about 2.5 percent for the second quarter.þþAlthough hardly exceptional by the standards of the 1990s or even compared with the 5 percent burst of growth in the summer of 2014, the pace of expansion is largely in line with the trajectory of the recovery, which began exactly six years ago.þþAnd if it continues at the same pace in the coming months, the economy’s underlying momentum means the Federal Reserve is likely to begin its long-awaited move to raise interest rates from historic lows by year end.þþOn Wednesday, Fed policy makers issued an upbeat assessment of the economy’s progress after concluding a two-day meeting. But they left interest rates near zero, where they’ve been since late 2008, when the recession and financial crisis reached a nadir.þþMost experts are looking for a move by the central bank this year, although opinion is divided over whether that means an increase when Fed policy makers next meet in September, or at their final meeting of the year in December.þþAs for the last quarter, much of the improvement in the economy came from a better trade balance, especially in terms of exports.þþHammered by a one-two punch from a stronger dollar and then a labor slowdown at West Coast ports, net exports reduced growth by nearly 2 full percentage points in the first quarter of 2015 and by 1 percentage point in the fourth quarter of 2014.þþThat was the worst two-quarter trade performance since 1998, according to a report by Morgan Stanley, but as the ports began functioning normally again this spring and the dollar stabilized, the drag from trade seems to have eased.þþIn addition to the impact on the headline growth numbers, the trade balance will also be watched by experts who want to gauge the degree by which economic distress overseas is affecting American exporters.þþDuring the last six weeks, China has emerged as a source of worry as investors dumped shares on local exchanges, adding to anxiety this year over whether Greece would default and leave the euro currency zone.þþThe next crucial reading for the economy will come Aug. 7, when the Labor Department reports the latest figures on hiring and unemployment for July. The unemployment rate in June stood at 5.3 percent, the lowest since April 2008, although that has been depressed by some jobless Americans’ giving up the search for work and dropping out of the labor force entirely.þþThe Fed and Wall Street are keeping an eye on the falling unemployment rate, but are also looking for signs that more unemployed Americans are returning to the labor force.þ
Source: NY Times
