Full recovery in sights for '14
WASHINGTON — After six years of a gloomy recession and shaky recovery, the U.S. economy looks poised to regain its glow next year with stronger job growth, bigger income gains for more people and a resurgence of homeowners moving up into new digs.
The overall economic outlook for the United States has improved sharply in recent weeks amid a string of surprisingly robust economic data: Businesses have stepped up hiring, new factory orders from abroad are at a two-year high, and consumers have been flocking to car lots and restaurants.
State and local governments that not long ago were in retrenchment are spending more, too.
“We could see the unemployment rate down to 6 percent this time next year,” said Robert Kleinhenz, chief economist for Los Angeles County Economic Development Corp.
That would be a full percentage point below the current rate and, in some analysts' views, close to full employment.
Some experts say economic growth could be even stronger next year now that the House has approved a bipartisan two-year budget deal.
Not only would the agreement undo most of the sequestration spending cuts in the short term, it would lower a major confidence hurdle for businesses, some of which complained that they have been hamstrung by the federal government's repeated budget standoffs and partisan warring.
“If that is dealt with, that goes a long way toward reducing uncertainty,” said David Hannah, chief executive of Reliance Steel & Aluminum Co. in Los Angeles.
Even before the budget deal, Hannah was preparing for a marked step-up in business next year and more aggressive hiring to add to his company's worldwide workforce of about 14,000.
Hannah said Reliance's orders accelerated in the second half of this year, which usually happens in the first half. He said the company got a good boost from the buoyant auto industry as well as its other mainline customers: aircraft makers, oil and gas firms and electronics companies.
Reliance's biggest source of revenue, nonresidential construction, has been lagging since the recession, but Hannah expects more demand next year as increased home-building establishes the need for more supermarkets, doctors' offices and other commercial and industrial development.
“We are looking for 2014 to be a better year overall in both sales and profits than 2013,” he said.
All in all, many economists view economic growth climbing to a solid 3 percent next year, a significant improvement from the 2 percent average annual pace that the economy has been stuck on for the past 4 1⁄2 years.
An acceleration to 3 percent would probably push up job growth to 250,000 a month on average, from a monthly average of 190,000 in the past 12 months, Kleinhenz said.
At that pace, the nation would recover all jobs lost in the recession by the end of 2014. It would push down the jobless rate closer to the 5.5 percent to 6 percent range that some now expect as the potential long-term unemployment rate.