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The economy is rising now – Business confidence and employment are increasing

Mutikani, 6-25 – [ Lucia Mutikani, Journalist for Reuters, 6-25-2015, Robust U.S. consumer spending buoys economic growth outlook, Reuters,] Jeong

U.S. consumer spending recorded its largest increase in nearly six years in May on strong demand for automobiles and other big-ticket items, further evidence that economic growth was accelerating in the second quarter. While other data on Thursday showed a modest increase in first-time applications for unemployment benefits last week, the underlying trend in jobless claims continued to suggest the labor market was tightening. The strengthening economy suggests the Federal Reserve could raise interest rates this year even as inflation remains well below the U.S. central bank's 2 percent target. Many economists expect a rate hike in September. "This portends well for second-quarter growth and the broader momentum of economic activity in the second half of the year, and keeps the prospect of a September rate hike squarely on the table," said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.The Commerce Department said consumer spending rose 0.9 percent last month, the biggest gain since August 2009, after a 0.1 percent rise in April. May's sturdy increase in consumer spending, which accounts for more than two-thirds of U.S. economic activity, suggested households were finally spending some of the windfall from lower gasoline prices, and capped a month of solid economic reports. It was the latest indication that growth was gaining momentum after gross domestic product shrank at a 0.2 percent annual rate in the first quarter, as the economy battled bad weather, port disruptions, a strong dollar and spending cuts in the energy sector. From employment to the housing market, the economic data for May has been bullish. Even manufacturing, which is struggling with the lingering effects of dollar strength and lower energy prices, is starting to stabilize. Though a report on Thursday showed some cooling in services sector activity in June, businesses continued to view economic conditions as improving. Economists had forecast consumer spending rising 0.7 percent last month. U.S. stocks traded higher, with healthcare shares enjoying a broad rally after the U.S. Supreme Court issued a ruling upholding tax subsidies crucial to President Barack Obama's signature 2010 healthcare law. Prices for longer-dated U.S. government debt fell, while the dollar was little changed against a basket of currencies. LABOR MARKET TIGHTENING Last month, spending on long-lasting manufactured goods such as automobiles jumped 2.2 percent and outlays on services like utilities rose 0.3 percent. When adjusted for inflation, consumer spending increased 0.6 percent, the largest jump since last August, after being unchanged in April. The rise in real consumer spending prompted economists at Barclays to bump up their second-quarter GDP estimate by one-tenth of a percentage point to a 3.1 percent annual rate. Personal income increased 0.5 percent in May after a similar gain in the prior month. Income is being boosted by a tightening labor market, which is starting to push up wage growth. A separate report from the Labor Department showed initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 271,000 for the week ended June 20. But it was the 16th straight week that claims had held below 300,000, a threshold usually associated with a firming labor market. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell last week. The strengthening jobs market could be bolstering confidence in the economy, encouraging households to tap into savings that have been boosted by lower gasoline prices. The saving rate fell to 5.1 percent last month from 5.4 percent in April. Still, savings remain at lofty levels. That, together with rising wages, suggests more fuel for consumer spending for the rest of the year. "The labor market is tight, wages and incomes are rising solidly, so we should expect consumers to help lead the economy forward," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. Despite the acceleration in consumer spending, inflation pressures remained tame last month. A price index for consumer spending increased 0.3 percent after being flat in April. In the 12 months through May, the personal consumption expenditures (PCE) price index rose only 0.2 percent. Excluding food and energy, prices edged up 0.1 percent after a similar gain in April. The so-called core PCE price index rose 1.2 percent in the 12 months through May, the smallest gain since February 2014.

Economy is high now

Gillespie, 5-8 – [Patrick Gillespie, CNN reporter on the economy, covers many other topics like the labor market and inflation, Good news U.S. economy adds 223,000 jobs.;] Jeong

America can breathe a sigh of relief. The economy is improving with the spring weather. The U.S. added 223,000 jobs in April, a healthy pick up after a disappointing March and about in line with what economists surveyed by CNNMoney projected. April's strong job gains reflect a trend the country saw last year: job growth cooling in the winter months, then gaining momentum into the spring. "They are good numbers," says Kate Warne, investment strategist at Edward Jones. "It's reassuring that we saw job growth rebound to above 200,000." The good news doesn't stop there. The unemployment rate dropped to 5.4%, its lowest mark since May 2008. This is likely to be helpful to Democratic presidential candidate Hillary Clinton. Many believe she needs the economy to keep growing until Election Day in order for her to win the presidency. Wall Street was very happy with the report. The Dow is soaring over 250 points (nearly 1.5%) in Friday trading, and the yield on the 10-year government bond fell substantially as investors cease worrying so much about a slowdown. The one thing regular Americans still want is better pay. There are finally signs it's picking up. Wages are now growing at 2.2%, above the expectations from CNNMoney's survey. Experts say pay should continue to bump up if unemployment remains low. Where the jobs are: Hiring has been strong in many industries with one big exception: Energy. About 15,000 energy jobs -- oil drillers, coal miners and others -- were lost in April, the worst month for the sector since May 2009. Low gas prices are great for Americans at the pump, but they're causing energy companies to cut jobs. Energy jobs "took it on the chin once again," says Sam Bullard, senior economist at Wells Fargo Securities. "It certainly suggests the stronger dollar and lower oil prices are having a substantial impact." Despite the bad energy news, other industries picked up the slack. Construction and health care each added 45,000 jobs. Business services -- marketing, accountants, consultants -- was the best performer in April, adding 62,000 jobs.

Jobs Report indicates that the economy is strong

CBS News, 6-11 – [CBS News, 6-11-2015, “After Early-year Skid, U.S. Economy Gains Traction”,] Jeong

Americans are spending more on cars, clothing and other products, a sign the improving job market and uptick in hourly wages is helping boost retail sales. CBS NewsWASHINGTON - Americans are spending more on cars, clothing and other products, a sign the improving job market and uptick in hourly wages is helping boost retail sales.¶ The Commerce Department says retail sales climbed a seasonally adjusted 1.2 percent in May, following a 0.2 percent gain in April. Sales have risen 2.7 percent over the past 12 months. The upswing in shopping reflects greater confidence in the economy. Consumers upped their spending by more than 2 percent last month at auto dealers and building materials stores. Employers have added more than 3 million jobs over the past year, but until May many workers appeared to be saving as much of their paychecks as they could. "These data reinforce our view that the underlying trend in growth remains solid -- more than solid enough to keep the unemployment rate trending down," said Jim O'Sullivan, chief U.S. economist with High Frequency Economics, in a client note. Excluding the volatile categories of autos, gas, building materials and restaurants, sales rose a solid 0.7 percent.¶ The jump in retail spending and signs of growth in the services sector shows that consumption in the first quarter was stronger than previously thought, said Paul Ashworth, chief U.S. economist with Capital Economics. The U.S. Commerce Department said last month that gross domestic product shrank 0.7 percent in the first three months of the year.¶ But Ashworth said in a note that the surge in retail spending means "it is now possible that GDP didn't actually contract in the first quarter."¶ Consumers upped their spending by more than 2 percent last month at auto dealers and building materials stores, evidence that they're making longer-term investments in their daily commutes and homes.¶ The figures confirm the strength seen in separate reports on autos and housing. People bought cars and trucks last month at an annual pace of 17.8 million, the fastest rate since July 2005, according to industry analyst Autodata Corp. The number of newly built homes being purchased has surged nearly 24 percent year-to-date, according to the government.¶ More Americans are also upgrading their wardrobes. Thursday's report showed that shopping at clothiers also rose 1.5 percent last month.¶ Sales at gasoline stations increased 3.7 percent, largely reflecting the higher costs of gas since April. Prices at the pump rose by roughly 14 cents a gallon last month to $2.74 during Memorial Day weekend, according to AAA's Daily Fuel Gauge Report.¶ Excluding the volatile categories of autos, gas, building materials and restaurants, sales rose a solid 0.7 percent.¶ Spending growth at restaurants was subdued last month, inching up just 0.1 percent. But over the past year, restaurant and bar receipts have surged 8.2 percent. Economists watch the retail sales report closely because it provides the first indication each month of the willingness of Americans to spend. Consumer spending drives 70 percent of the economy. Yet retail sales account for only about one-third of spending, with services such as haircuts and Internet access making up the other two-thirds.¶ Job gains over the past year have driven down the unemployment rate to 5.5 percent from 6.3 percent in May 2014. Still, many Americans were hesitant to spend as their incomes were barely rising above inflation. Average hourly earnings grew 2.3 percent over the past 12 months, a pace that has recently accelerated but remains below the 3 percent level typical in a healthy job market.¶

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