European Unrest Casts Shadow Over US Economic Growth

November 17, 2011 / Samantha Bartolata, Editor in Chief

Employment and housing statistics indicate the state of the economy in the US is on the rise. Employment data from October shows that new applications for state unemployment benefits plummeted to their lowest point in the last seven weeks. According to the Labor Department there were 3,888,000 new claims, indicating a reduction of 5,000.

European Unrest Casts Shadow Over US Economic Growth

Could this be the beginning to the end of the weak labor market? A CFO for one major manufacturer says economic conditions are rising with ever-increasing speed. This trend may be due to a pickup in the number of new jobs being created.

Construction jobs may increase because there was a 10.9 percent increase in building permits issued in October. The high number of foreclosures led to a need for more rental units. There were more permits for building apartments than were issued in the last three years.

When new jobs continue to increase and unemployment claims continue to decrease, we can expect accelerated economic growth to follow. Although there was a dip in activity in the mid-Atlantic region, employers continued to hire workers. This may be in anticipation of a continuing upward trend. There is an expectation that fourth-quarter growth may surpass the annual rate of 3 percent, increased from the July-September growth of 2.5 percent.

Two factors cast a shadow over that anticipation, however. Oil prices are rising and the instability in Europe may affect the US economy if it continues long-term. Wall Street may consider that to be a likely event. Stocks dropped in the middle of the day and Treasury debt prices were lowered. The US dollar did remain stable compared to foreign currencies.

The business activity index at the Philadelphia Reserve Bank dropped from 8.7 in October to the current 3.6. The employment-sub-index went up and the average workweek index was three times higher.

The Bloomberg Consumer Comfort Index’s monthly expectations gauge rose to minus 32, up from minus 45. The weekly measure of current conditions increased to minus 50, climbing up from a three-year low. This was from the period ending November 14.

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