While the US economy is creating plenty of jobs, it isn’t growing much. In the first half of 2016, gross domestic product (GDP) grew at an anemic annualized rate of just 1%, compared to about 2% since the end of the recession, and 2.5% from 2000 through 2007.
Usually, weak economic growth has been associated with weak employment growth. But not now!
Employment growth during the first six months of the year totaled slightly over one million jobs, or a healthy average of 175,000 net new jobs/month. If the historical relationship between GDP and employment that existed before the Great Recession still held, 40% fewer jobs would have been created since January.
That said, what does slow growth mean for future wages, why is GDP growth so slow, is it likely to persist, and what does this imply about future interest rates?
-Excerpt from Elliot Eisenberg, President of GraphsandLaughs, LLC. Read more here.