Strong Confirmation of a Slow Expansion
The economic expansion has been even slower than previously understood, and while the economy is likely to keep expanding in the foreseeable future, there isn’t much pressure on wages to rise.
That’s the message from the August edition of Business Conditions Monthly, the American Institute for Economic Research’s bird’s-eye view of the economy, which was released today.
Perhaps overshadowed in the July 30 release of 2nd quarter GDP numbers by the Bureau of Labor Statistics was the annual benchmark revision of previous GDP data. The revision of about three years of data, using more detailed information, had the cumulative effect of slicing today’s GDP by almost a percentage point, said Polina Vlasenko, senior research fellow at AIER.
The revised data show GDP growth has been the slowest in this expansion of any expansion since World War II, Vlasenko said.
“In the last three years, the recovery has been even slower than we thought, and it wasn’t that spectacular to begin with,” Vlasenko said.
The revisions help explain why wages have grown so slowly, she said. Without a driver of an economic bubble like the tech or housing boom, the economy’s not going to be overheating soon – perhaps not such a bad thing — and AIER’s indicators forecast continued expansion, she said.
AIER’s index of Business-Cycle Conditions Leading Indicators rose to 67 in July from 64 in June, well over the neutral level of 50. AIER’s cyclical score of leaders fell from 83 in June to 77 in July, but five out of six coincident indicators support continued expansion. “This is a strong confirmation of an ongoing recovery,” according to the report.