- Real gross domestic product grew at an annualized rate of 2.4% in Q2, ahead of expectations.
- Unemployment stands at 3.6% nationally, and is touching record lows in many states.
Let's do a thought experiment together. First, forget everything you've experienced and heard about the economy over the past few years. I mean everything. I'm talking about the snarled supply chain, the inflation, the quiet quitting. I need your mind to be a blank sheet of paper.
Now consider the following datapoints:
- Real gross domestic product, or real GDP, grew at an annualized rate of 2.4% in the most recent quarter, comfortably ahead of expectations.
- The unemployment rate dropped to 3.6% in the most recent month. In many states, unemployment is at or near record lows, with the unemployment rate in South Dakota at just 1.8%.
- The prime-age employment-population ratio, or the share of prime-age workers with a job, stands at 80.9%, the highest in over two decades.
- Construction spending on manufacturing is soaring, while manufacturing employment recently hit its highest level in 15 years.
- Average hourly earnings increased are up 4.4% on last year. Inflation meanwhile is up 3% on last year.
- The Conference Board's consumer confidence index is at the highest level in two years.
How would you describe that kind of economy?
We're talking about an economy with solid GDP growth, low unemployment, high prime-age labor participation, strong construction and manufacturing investment, solid consumer confidence, and wage growth that's outstripping inflation.
It looks pretty great, right?
If you hadn't guessed it already, that's the US economy we're living in right now.
The reality of course is that none of us can forget the journey to this point, from the pandemic to the free money boom to the historic inflation to the painful rate hikes.
It's been a discombobulating rollercoaster ride for anyone living through it. Lots of people still aren't feeling great about the economy. Credit card debt has reached record levels this year, and student loan payments are set to resume in October. The economic rebound isn't being felt everywhere. And the fight against inflation isn't over yet.
But there's no question that when you consider the data, overall the US economy appears to be headed in the right direction. And the dream scenario for the economy, to get inflation down without a sharp spike in unemployment or a recession, is looking more likely by the day.