A couple of indicators just out suggest the U.S. economy might be getting ready to shift into a higher gear.
- Overall industrial output rose at twice the rate most economists had predicted — with the strongest monthly gain in more than a year.
- The U.S. Federal Reserve said manufacturing and factory output rose as well. That’s a positive sign because economic trouble abroad has put a damper on demand for U.S. manufactured goods.
- At the same time, retail sales data were strong. And domestic spending is of course the most powerful driver of the U.S. economy.
- Homebuilders also broke ground on more new houses in April — housing starts rose 6.6 percent (seasonally adjusted), which was better than economists had predicted.
Add all this up, and, some analysts say, the economy could accelerate in the second half of the year.
“The economy is looking better,” says David Kotok, the chief economist at Cumberland Advisors. And despite weaker-than-expected jobs growth in the month of April, Kotok says, if you look over the past few months, both “wages and jobs are in a positive trend.”
This year has seen pretty anemic growth so far for the U.S. economy — with gross domestic product increasing at less than 1 percent.
“I think real GDP growth will be stronger for the rest of the year,” says Mark Zandi, chief economist of Moody’s Analytics. “The bottom line is that the economy is performing reasonably well, and all the economic trend lines look good for the foreseeable future.”
A pickup now could have big implications for the presidential race. As NPR’s John Ydstie reported on Morning Edition today:
“Most models that try to predict who’s going to win the presidency take into account some measure of how the economy is doing. That’s because generally if it’s going strong in the six months or so before the election, history suggests the party currently in the White House will win. If it stinks, the party not in the White House takes over.”