Reuters (02/25/13) Jason Lange
After years of paltry growth and despite a government austerity drive that could batter the economy for months, signs are emerging that a more robust U.S. economic recovery is around the bend. The main reason is an improvement in household finances, which by some measures are looking more solid than they have in decades. “We finally are getting something that looks more like a normal recovery,” says Nigel Gault, an economist at IHS Global Insight in Lexington, Massachusetts.
This hint of normalcy suggests the slow improvements in the labor market over the past few years can now provide a bigger boost to consumer spending, which will in turn create more jobs. Gault and others expect this increasingly self-reinforcing cycle will lead growth to pick up substantially by the end of the year, even if Washington goes forward with $85 billion in budget cuts scheduled to begin on Friday. Economists polled by Reuters this month predicted the economy will expand at a 2.8% annual rate in the fourth quarter, up from the 1.8% rate expected in the first quarter.