Many Americans worry that
that high energy costs combined with rising interest rates will
plunge the U.S. economy into economic doldrums. The latest data,
however, reveal that the economy continues to grow steadily despite
these potential pitfalls. While a great deal of news analysis hypes
weaknesses in the economy, the facts suggest otherwise.
During the first quarter
of this year, the economy grew at an annualized 5.3 percent rate,
the second highest rate of growth in the last five years and well
above historical averages.
During the same period
productivity grew by 3.7 percent, a full percentage point above the
2.7 percent average growth rate over the last 10 years.
In May alone businesses
and employers created 75,000 new jobs. This is the 33rd consecutive
month in which the economy has added jobs, with 730,000net new jobs
created since the start of the year. A second measure of
employment growth, the household survey, found that in May the
economy added 288,000 new jobs, with 1.3 million new jobs created
since the start of the year.
This job growth has kept
the unemployment rate at historically low levels. Aside from the
tech bubble, the economy has not seen unemployment rates lower than
May's 4.6 percent since March of 1970.
Additionally, the number
of discouraged workers who stopped looking for work because they
believe they cannot find jobs also dropped sharply, falling to
323,000 from 392,000 a year ago.
Despite the challenges it
faces, the American economy continues on an even keel. As the
economy grows at a brisk pace, businesses continue to create jobs
for American workers. Sound pro-growth tax policy, such as the
recent extension of investment tax relief, has kept the American
economy growing despite the weight of rising energy costs and
higher interest rates. Now Congress should remain on the
right track by reforming onerous regulatory burdens-such as
Sarbanes-Oxley-that stand in the way of further economic
growth.
James Sherk is Policy Analyst, and
Samuel Hyman is Research Assistant, in the Center for Data Analysis
at The Heritage Foundation.