by Ryan Chou
Recently, the federal report on the second quarter of the US economy was released. How’s the economy?
In terms of GDP growth, the economy grew at a rate of 2.0% this quarter. This is on par with the estimated 2.1% economic growth, but lower than the 3.1% growth that was seen in the 1st quarter. This rate is similar to growth seen in 2016 and the first two quarters of 2017. The cause of this slight slowdown for the second quarter can be attributed to factors such as exports.
In terms of corporate profits, an increase of roughly $106 billion was seen in the second quarter, which can be compared to a first quarter drop of about $78 billion. In domestic financial corporations, profits slowed from $22 billion to about $4 billion this quarter, while non-financials managed to go from a $108 billion slowdown to a $44 billion increase.
Unemployment continues to remain at about a 50-year low at 3.7%, close to the expected 3.6% unemployment. Additionally, 130,000 jobs were created, meaning job growth has slowed for three months in a row now. And this total is somewhat slower than the expected 158,000 job growth. However, it maintains a now 107-month job growth streak. The general trend of job growth has been at a downward slope, with a decrease of 20,000 jobs from the last two months. However, it is still much better than job numbers 10 years ago in the Great Recession where job losses peaked at around 800,000 per month.
Average wages are also up, with an hourly average of $28.11. This is a slight increase of 11 cents and 3.2% over the last year.
Jobs in retail saw a drop of about 11,000, which may reflect the progressive closing down of malls in favor of digital shopping on sites such as Amazon. And for the first time in three years, the rate of manufacturing job growth slowed. The economy added 3,000 manufacturing jobs, on-par with a slow stagnation of manufacturing jobs since the Great Recession at 12.9 million jobs compared to a recession total of 11.5 million jobs. Prior to the recession, there were 14 million manufacturing jobs.
Labor-force participation is up two-tenths of a point to 63.2% while the average workweek grew by six minutes. Additionally, US plans to sustain the current economic expansion occurring by continuing to cut interest rates, with an expectation of a cut of 0.25% of a point in an effort to artificially stimulate the economy. However, federal interest rates, with the exception to last month, have not been cut in a decade. And when federal interest rates are cut, it is very typical for the economy to soon fall into recession despite the artificial stimulus.