U.S. economy: Steady as she goes

ANN ARBOR-America's economy will hum along its path of moderate growth, adding 4.7 million jobs through the end of next year, say University of Michigan economists. "Employment growth will not exceed 200,000 jobs per month, however, until output growth ratchets up to a sustained 3-percent pace during the second half of next year," said U-M economist Joan Crary. "With this moderate pace of job growth, employment will finally exceed its January 2008 peak around mid-2014, a six-and-a-half-year span." In their annual summer forecast update of the U.S. economy, Crary and colleagues Daniil Manaenkov and Matthew Hall predict overall economic output growth (as measured by real Gross Domestic Product) of 2.2 percent during this year and 3 percent during next year-compared with last year's 1.7 percent growth. Unemployment is expected to improve to 6.8 percent by the end of 2014, they say. The unemployment rate averaged 8.9 percent in 2011 and 8.1 percent in 2012 and is projected to average 7.5 percent for the current year. "Sluggish labor force growth has contributed to the drop in the unemployment rate during the recovery," Crary said. "As job prospects improve, workers should return more quickly to the labor pool, slowing the improvement in the jobless rate." In addition to moderate growth in GDP and employment this year and next, the forecast calls for steady recovery in the housing market.