Trends

 

05 06 2014

05 06 2014

Spring Weather Predicted to Boost US Economy

The brutal winter that plagued much of the U.S. has now passed, and spring is being welcomed for more reasons than one. For businesses, spring means an improved economy rebounding from low consumer spending rates during the frigid winter months, MarketWatch reported.

A number of reports released over the past week have indicated the economy is set to experience growth, ranging from improved consumer sentiment to increased hiring across a variety of sectors. Hiring in particular is predicted to grow – according to economists, the U.S. could see a net gain of 218,000 jobs in April, making it the largest increase in employment in five months.

Lawrence Creatura, a portfolio investment manager at Federated Investors, told the source that strong jobs numbers could act as a boon to the overall state of the economy.

“A stronger than expected jobs number would be very welcome and encouraging news,” Creatura said. “Right now investors are suspicious that expectations are a little bit ahead of reality.”

While the economy is expected to grow this spring, initial GDP reports may be grim, MarketWatch reported. Due to the severe weather seen in the first months of 2014, economists at IHS Global Insight predict first quarter GDP growth results will drop to 1 percent, down from 2.6 percent in the fourth quarter of 2013.

Economists predict growth in consumer spending

Increased hiring in particular could have ripple effects, resulting in an upswing in consumer spending and home sales. The spring thaw is already in effect in some sectors, as spending may have increased by 0.6 percent in March, economists have predicted. Some of the growth is expected to be attributed to rising auto sales and retail purchases. If the predicted 0.6 percent increase is confirmed, it would mark the greatest increase in consumer spending since November.

Gains in manufacturing are also expected – the Institute for Supply Management’s manufacturing index will likely rise for the third month in a row, bringing it to the highest level since the end of 2013. Creatura tempered the positive predictions, however, stating that some investors are still concerned over growth rates.

“The economy and different sectors within it have advanced in fits and starts in this recovery,” Creatura said. “Investors are still worried that the gains are not sustainable.”

While some investors remain cautious, overall, economists seem keen to predict growth throughout the warmer months. As hiring and spending continue to increase, some small business owners may find themselves in a position to expand their organizations. Others may be focused on retaining high performing employees as the market improves – which may require a focus on competitive compensation plans.

Ryan Sweet, a senior economist at Moody’s Analytics, commented on the importance of wages in the economy.

“What really matters is wages,” Sweet said. “In this cycle the connection between wages and consumer spending is pretty tight. Wage growth should do wonders for housing and help boost overall growth.”

Paying for these expenses, whether they are hiring costs, wage increases or business expansion, can be pricey. Those looking to expand their operations should seek out alternative lenders like National Funding for improved access to working capital.

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