This latest evidence suggests that the so-far-anemic economic recovery is gradually accelerating and, with each passing month, could be growing more durable — good news for a workforce that still faces a historically high jobless rate and for a president who is looking to keep his own job in November.
But, as Bernanke testified, there is a long list of factors that might knock off course what he called an “uneven and modest” recovery. State and local governments are continuing to lay off workers
, many borrowers are having trouble getting loans, and the housing market
And if that were not enough, the recent spike in gasoline prices is likely to eat away at workers’ salaries.
“Continued improvement in the job market is likely to require stronger growth,” Bernanke said.
Until late last year, the economy seemed to be flirting with a new recession. But in the past few months, the dynamics have changed notably. The European debt crisis, which was threatening to upend global financial markets, has moderated, at least for the time being. The U.S. unemployment rate has come down rapidly to 8.3 percent.
“The U.S. is close to a self-sustaining expansion, where job gains drive income growth and consumer spending, in turn driving further job gains,” economists at PNC Bank said in a research memo.
Even more bright signs emerged Wednesday. The European Central Bank agreed to provide an additional $700 billion in cheap loans to the continent’s banks. Analysts said the move will further buttress Europe’s financial system and ease concerns that banks would stop providing credit — the lifeblood of an economy — to the continent’s consumers and businesses.
The Commerce Department reported that the U.S. economy grew at a clip of 3 percent in the final three months of last year, surpassing a previous estimate of 2.8 percent. The data showed that companies rebuilt their inventories after a cautious summer and fall and that consumer spending increased.
And the Fed’s “beige book” survey, which offers anecdotes of economic activity around the country, reported more factory production — especially in the auto sector, as well as at steel and metal firms. Retail sales also got a boost.
Even housing improved modestly in many parts of the country, a first since the end of the recession.
“This is further evidence that the moribund housing market could be on the cusp of a revival in which higher demand triggers an eventual increase in supply,” Paul Edelstein, an economist at IHS Global Insight, said in a report.
The improved outlook has lifted U.S. stock markets. On Tuesday the Dow Jones industrial average closed above 13,000, and on Wednesday the technology-heavy Nasdaq composite index crossed 3000 for the first time in more than 11 years before settling down a few points.