Like kids in the back seat on a long drive somewhere fun, people who watch the economy have been asking the same question for what seems like forever now. “Are we there yet?”
Just maybe, it’s almost time to answer “Yes.”
A string of good reports on various pieces of the U.S. economy this week have reinforced the idea that the long-awaited recovery is finally picking up steam. From consumer confidence to construction spending, manufacturing to motor vehicle sales, many arrows lately are pointing up.
“While short of any glowing upside surprises ... U.S. economic data are at least all moving in the right direction,” wrote Robert Kavcic, an economist at BMO Capital Markets, in a note Thursday to clients.
The most important number — for most of us anyway — comes out this morning, when the Commerce Department will release its first take on the job market in October. Economists surveyed by Bloomberg are predicting a gain of 125,000 jobs for the month — slow growth, but better than September — though also a one-tenth-of-a-point uptick in the unemployment rate, to 7.9 percent.
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That will be the last number out before the big event on Tuesday.
The election campaign between President Barack Obama and Republican presidential nominee Mitt Romney has been fought largely on economic grounds, with Romney charging the recovery isn’t happening fast enough — if at all — while Obama counters that Romney’s proposed solutions would pull most Americans backward.
The tight race has turned seemingly every sliver of economic data for six months now into a political talking point, and appears to have colored the way many Americans view the state of the economy. Gallup polls about economic confidence have been finding a sharp divide along party lines, with Democrats generally positive about events and Republicans taking a much dimmer view. That gap has only widened as Election Day draws near.
But if Obama fans see rosy skies and Romney supporters see gloom, reality is probably someplace in the middle, with the data showing a recovery that is broad, but far from robust. On Thursday alone, reports showed labor productivity growing at a steady pace in the third quarter, manufacturing activity inching up in October, construction spending up a bit in September and consumer confidence at its highest level in more than four years.
Those are all national figures. There have been good signs lately in St. Louis, too.
The jobless rate in metro St. Louis dropped to 7.4 percent in September, its lowest level since 2008, according to numbers out Tuesday. Home sales have climbed in the region for more than a year, with signs that prices are finally turning around, too. Just this week, Sam’s Club and Schnucks opened new stores — in Wentzville and Ballwin, respectively. And companies ranging from LMI Aerospace to Dial Corp. to Lord & Taylor are planning expansions here.
But all this good news comes with a big caveat.
“Progress remains fragile and fragmentary,” said Ken Simonton, chief economist at the Associated General Contractors of America.
That means the economy could stall out any time.
While the effects of Hurricane Sandy, which clobbered the Northeast on Monday, are still being measured, Moody’s estimated Thursday that it’ll cost $20 billion in lost economic activity, mostly in metropolitan New York. That’s not much compared to the scale of the national economy, but it’s another bump in the road.
A far bigger bump could loom at year’s end, when the “fiscal cliff” — Congress’ self-imposed recipe of debt-busting taxes and spending cuts — is set to take effect. While the cliff doesn’t seem to be registering much with consumers, fears of an impasse already have some big companies, including Ferguson-based Emerson Corp., cutting back spending. And if it does come to pass, experts predict the resulting crunch could knock down the economy by 4 percent next year, more than enough to tip the economy back into recession.
Beyond that, there are the long-simmering European debt crisis, which is hampering exports from the U.S., and a slowdown in China, which threatens to drag other developing economies down with it.
So in other words, no matter what the jobs report says this morning, and no matter who wins the White House Tuesday, there are still plenty of potholes to dodge before we get to that fun place known as a robust economic recovery.
The Associated Press contributed to this report.
