Published : Jan. 11, 2015 - 21:13
An employee uses a vibrating table to loosen stacks of $5 notes before they are cut into singles at the Bureau of Engraving and Printing in Washington. (Bloomberg)
The U.S. is back in the driver’s seat of the global economy after 15 years of watching China and emerging markets take the lead.
The world’s biggest economy will expand by 3.2 percent or more this year, its best performance since at least 2005, as an improving job market leads to stepped-up consumer spending, according to economists at JPMorgan Chase & Co., Deutsche Bank AG and BNP Paribas SA. That outcome would be about what each foresees for the world economy as a whole and would be the first time since 1999 that America hasn’t lagged behind global growth, based on data from the International Monetary Fund.
“The U.S. is again the engine of global growth,” said Allen Sinai, chief executive officer of Decision Economics in New York. “The economy is looking stellar and is in its best shape since the 1990s.”
In the latest sign of America’s resurgence, the Labor Department reported on Jan. 9 that payrolls rose 252,000 in December as the unemployment rate dropped to 5.6 percent, its lowest level since June 2008. Job growth last month was highlighted by the biggest gain in construction employment in almost a year. Factories, health care providers and business services also kept adding to their payrolls.
About 3 million more Americans found work in 2014, the most in 15 years and a sign companies are optimistic U.S. demand will persist even as overseas markets struggle.
U.S. government securities rose after the report as investors focused on a surprise drop in hourly wages last month. Ten-year Treasury yields declined seven basis points to 1.95 percent at 5 p.m. in New York on Jan. 9.
“We are still waiting to see the kind of strengthening of wage numbers we would expect to be consistent with what we are seeing elsewhere in terms of growth and the absolute jobs numbers,” Federal Reserve Bank of Atlanta President Dennis Lockhart said in a Jan. 9 interview.
The U.S. is breaking away from the rest of the world partly because it has had more success working off the debt-driven excesses that helped precipitate the worst recession since the Great Depression.
“The progress has been far greater in the U.S.,” Glenn Hubbard, dean of the Columbia Business School in New York and a former chief White House economist, told the American Economic Association annual conference in Boston on Jan. 3.
Delinquencies on consumer installment loans fell to a record-low 1.51 percent in the third quarter, the American Bankers Association said on Jan. 8. That’s “well under” the 15-year average of 2.3 percent on such loans, which include credit cards and borrowing for car purchases and home improvements, it said.
U.S. households have benefited from the strengthening job market and the collapse in oil prices. The nationwide average cost of a gallon of regular gasoline was $2.17 on Jan. 8, the cheapest since May 2009, according to figures from motoring group AAA. (Bloomberg)