Economic News: Unemployment, GDP
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Sure, the housing market is an important part of the economy. But there are other considerations as well. Indeed, without jobs and an expanding GDP, the housing market is likely to continue to languish. Today’s data releases have caused some concern about the economy.
Unemployment
Unemployment claims continue to rise. The pace of the increase had been slowing, but this week an increase has been seen in jobless claims. However, the claims rose by 15,000, which indicates a relatively small increase, leading to the hope that the economy might still be on track for recovery. Bloomberg reports on what the labor market means for the recession:
“We’re in the prelude to the end of the recession,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, who accurately forecast the drop in GDP. “The stimulus will build steam, but it’ll be a pretty tepid recovery.” The loss of jobs “is one factor holding back consumer spending,” he said.
Until employment picks up, consumer spending will remain weak. Additionally, the current state of the labor market may affect housing. Housing can’t pick up without the employed. Additionally, if job losses continue to mount, there is likely to be an increase in foreclosures down the road.
GDP
Another important economic release for today was GDP data. Quarter 1 data showed that GDP contracted by 5.5%. This is somewhat discouraging, but the news comes with a silver lining. GDP had actually been expected to shrink by 5.7%. This means that GDP was in better shape than expected. The news, when combined with the information from the relatively flat labor market, indicates that a slow recovery might begin soon. However, the economic data makes it clear that the end of the recession, and the subsequent reversal of the current situation will comes quite slowly.
The economic news has not been enough to cause problems for the stock market, however. Other considerations are driving U.S. stocks higher right now, and that is something that might add a little confidence to the financial markets in general.
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