Sluggish growth in the U.S. economy will likely persist in the
coming year, although brighter signs are ahead, according to a
senior Federal Reserve Bank economist.
"The economy has been
expanding, and when you think about whats been happening
in the U.S., its sort of good news and bad news," William
A. Strauss, senior economist and economic advisor at the
Federal Reserve Bank of Chicago, said during the Metals Service
Center Institutes Economic Summit in Schaumburg, Ill.
"The U.S. economy is the strongest economy in the world, but
the bad news is that it only grew at 1.6 percent in the second
quarter vs. the second-quarter basis. Its also well below
the 2-percent trend."
One good sign for the
economy is a recent rise in home prices, which had fallen more
than 30 percent from their peak in 2006-07.
"One of the successes
is that we have seen the housing market starting to improve,"
he said. "Before, homeowners literally owed more mortgage than
what their homes were worth."
The automotive sector
has been a bright spot for the metals industry, with some 16
million vehicles sold in August, the best figure since November
2007, he said.
been an upside surprise to the industry," Strauss said, but
added that total vehicle sales would likely slow after rising
13 percent in 2012. Strauss predicted numbers will rise around
8 percent this year and 3 percent next year.
While the economy
looks poised to grow, rates remain lackluster. This year the
economy will grow at around 2.4 to 2.5 percent, he said, with
growth expected to exceed 3 percent in 2014.
Employment levels are
a concern for the ailing U.S. economy, which shed more than 8.7
million jobs from December 2007 to February 2010, and has since
recovered some 6.8 million jobs. However, Strauss warned that
with new workers entering the labor force every month, coupled
with the number of discouraged workers, the U.S. labor market
is "far away" from normal.
The plateauing in the
industrial sector has also been a concern. While it led the
recovery in the first three years after the recession, Strauss
said that its been flat recently. Looking at the most
recent data, year-on-year growth has been 2 percent while
manufacturing has historically grown by around 3 percent.
Specifically in steel,
capacity utilization has remained at steady but low levels.
Steel mills like to operate in the 80- to 90-percent range, and
recent numbers show the sector "more than 10 percentage points"
lower than that level, Strauss said.
of room to increase output in the iron and steel sector," he
said. "Weve seen prices that have remained low and
declined over the past year."