Jobs and the Economy: What Today's Numbers Mean
The government reported that gross domestic product grew at a 4.0% annual rate between April and June, reversing a first-quarter drop that was revised to a narrower 2.1% decline. And payroll-processing firm
"We're on a pace for almost 3 million jobs," created this year, said Zandi, whose firm runs ADP's surveys of employer data. "That's a pretty good year by any historical standard.
TheStreet's Joe Deaux has details on what the latest GDP numbers mean for investors:
What has happened is fairly simple: Businesses are more confident and investing a little more. Investment accounted for more than half of the GDP gain. Governments spent a little more, and consumers kept doing broadly what they have been doing.
The whole picture proves (again) that the two least-consistent links in the recovery remain business investment and especially housing investment. When they work, the recovery works. And when they don't, we get the wobbles that have come to be familiar since the economy began climbing out of its post-2007 hole.
Right now, both of those are doing OK, but not remarkably well. And especially with housing, the recent data has been wobbly, with poor reports on both new home sales and building permits, as well as news this week that contracts to buy existing homes dipped in June after a strong May . That took a notable toll on housing stocks like D.R. Horton
"Normally the launching pad is housing, and a strong recovery in housing," said Mike Schenk, chief economist at the Credit Union National Association
The investment news could be better, since two-thirds of the money was spent on building up inventories rather than buying equipment or expanding R&D. But equipment investing did accelerate, as growth companies like Athenahealth
Still, the news could be better from housing.
The weakness in housing and goods production, like manufacturing, accounted for more than half of the drop in hiring growth from June's 281,000 new jobs. Construction added only 12,000 jobs, down from 24,000 in ADP's survey last month. And goods-producing companies added 16,000 jobs, down from 43,000 in June. The economy will really heat up if housing construction does , since new home building is still less than half of its pre-recession peaks.