The U.S. economy is displaying further signs of recovery as jobless claims have continued to drop over the past several months, new data has shown. Revised data released by the federal government showed the overall economy grew more quickly in the last quarter of 2013 than first estimated, leading some to believe the country will continue its forward momentum.
According to the U.S. Commerce Department, gross domestic product grew at an annualized rate of 2.6 percent during fourth quarter 2013, up from the 2.4 percent rate that was first reported in February. While this is still a significantly slower rate of growth than was clocked in third quarter 2013, when the economy grew by 4.1 percent, this uptick has some economists painting a more optimistic picture than they were just days ago, Reuters reported.
“The economy looks in a better place than it did just 24 hours ago,” said New York based Chris Rupkey, economist at Bank of Tokyo-Mistubishi UFJ.
Further adding to the optimism are improved joblessness rates. A report by the U.S. Department of Labor found initial applications for state unemployment benefits fell by 10,000 to a seasonally adjusted rate of 311,000 in mid March. This rate went against economists’ predictions, which had projected claims to increase to around 325,000. The drop caused unemployment claims to fall to their lowest levels since November. As a result, the four week average for unemployment also fell, bringing it to the lowest rate in six months.
Consumer spending increases
The Commerce Department report also showed a sharp increase in consumer spending, giving hope to business owners around the country, who in turn have increased investments in business equipment over the past several months. Growth in consumer spending in the final quarter of last year was revised to 3.3 percent, up from the originally estimated 2.6 percent. This gain marks the strongest increase in consumer spending in three years, adding approximately two percentage points to the U.S. GDP during that time. As consumer spending makes up more than two thirds of national economic activity, this upward trend is a strong positive sign for the economy.
In its initial report on fourth quarter 2013, the Commerce Department reported businesses increased their inventories by $117.4 billion – its recently revised figures show that dropping to $111.7 billion. A decline in inventories is generally positive for short term growth, as it indicates that, with fewer supplies on hand, business owners will be likely to restock their shelves, further boosting U.S. spending.
Even as first quarter 2014 growth is expected to have fallen to about 2 percent, due in part to frigid winter temperatures that plagued the country, some financial experts anticipate further boons to domestic markets.
“The recovery is finally self-sustaining,” Gus Faucher, senior economist at PNC Financial Services in Pittsburgh, said. “The economy should quickly pick back up again in the second quarter.”
Those who are looking to capitalize on the recovering economy may be interested in exploring their options to gain access to business capital to expand their operations. Business owners and leaders who are interested in these and other financial options should contact National Funding to find out more.