A slowly improving economy, inflation, national debt/budget problems and the global ripple effects of the Japanese tsunami have dominated recent news headlines.
The economy has been improving, albeit very slowly. The GDP estimate has been lowered for the first quarter 2011 to 2.5% annualized growth. GDP was weighed down by slacking demand and soaring commodity prices. This rate of growth is not enough to drastically reduce the unemployment rate. In general, business can accommodate up to 2 percentage points through higher productivity and without adding workers. Unemployment stood at 8.8% at the end of March. Nonfarm payroll increased by 216,000 jobs in March. Growth was driven in professional and business services including healthcare (+37,000) and food services (+27,000). Mining (+9,000), manufacturing (+17,000) and temporary employment (+29,000) also trended up. Since November 2010, the jobless rate has declined by 1.0%. 1.5 million jobs have been created since February 2010. It is important to note that unemployment varies tremendously by education level. As of January this year, the national unemployment rate was 30% for individuals without a High School diploma, 15% with a High School diploma and only 5% with a College Degree.
Corporate profits rose to recent record levels for the Quarter ending March 31, 2011. Earnings for S&P 500 companies gained an estimated 12% in three months compared to first quarter last year. That growth may be difficult to sustain because much of it was based upon cost cutting. Decreased supply and increased costs are expected because of the disruption of components coming out of Japan.