In a piece for The Markit Magazine, Bruce Kasman, J.P.
Morgan's chief economist points out three major trends that will drive the
recovery:
1: A strong, hiring corporate sector: Kasman calls corporate
ability to heal and produce strong results "The most impressive aspect of
US performance over the past four years..." Despite a deep recession and
weak recovery, profit margins are back to peak levels, and U.S. companies are
increasingly competitive worldwide. Strong margins, and increasing confidence
in the recovery should lead to corporate expansion and hiring.
The proof is in the numbers, with private sector jobs
increasing by 2 million, and private sector wages up 4.1 percent over the last
year.
2: A turnaround in consumer behavior. The financial crisis
was very hard on the American household, with lower job security, evaporating
wealth, and a freeze in credit availability. Their reaction was understandably
defensive, with households pulling back investment and building savings. This
precautionary behavior has been a drag on the recovery.
Though household deleveraging will continue, spending is
starting to move more closely with trends in income, which will help support
the recovery.
3: Housing provides a lift. Weakness in the housing market
has held back demand, credit availability, and hiring. We're finally starting
to see signs of a turnaround. The recent sharp increase in construction may not
last, but an improved labor market and ultra low mortgage rates should
stimulate demand. Sales of new homes are up 20 percent over the last 6 months,
and prices may have finally stabilized.
These aren't small trends.
Republicans, eat your hearts out….
Read more about it at http://www.markit.com/en/about/magazine/issue-16/mm16-focus1-us-economy.page
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