In January 2011 it appeared the economy was on pace to slowly but steadily expand throughout the year, as there was positive momentum in several pieces of economic data. Most notably, an improving labor market led to an improved consumer outlook, which combined with a strong manufacturing sector to fuel overall growth.
However, signs of economic weakness began to appear in the second quarter. The most obvious sign of weakness has been the labor market. In the recent recession, over 8 million Americans lost their jobs, and there has been no noticeable improvement during most of 2011. In late 2011, it appeared companies were firing fewer workers and some were even hiring leading to a decline in the unemployment rate.
Holiday sales were initially robust, then fell and bounced back after the holidays. Consumers are still hesitant to spend as job security (or lack of job prospects) make them cautious. It appears the economy is beginning to move forward again in early 2012 as better than expected payroll numbers roll in. Only time will tell if we are truly on an upswing.
