Date of this Version
Business in Nebraska, Volume 71, No. 719, June 2017
There has been a re-balancing of both global and domestic economic growth during 2017. Globally, growth is improving in Europe and China, yielding more balanced international growth. Within the United States, growth also has become more balanced across industries. As in past years, the service sector, supported by growth in employment and real wages, has grown steadily with increases in retail trade, business services, personal services and construction activity. However, in recent months, there also has been improved growth in the industrial sector, with a rebound in the energy sector, and more business investment in capital equipment. The result is more balanced economic growth.
Despite this rebalancing, economic growth remains moderate rather than strong, for at least two reasons. The first reason is weak growth in the labor force. Most fundamentally, the pace of job growth is slowed by the ongoing retirement of “baby boom” generation workers. In addition, the reserve of underutilized workers in the United States economy continues to shrink as the labor market completes its recovery from the Great Recession of 2007 through 2009. Weak growth in the labor force limits growth in gross domestic product.