WASHINGTON — The nation's economic recovery, seemingly stuck in another pothole after the 16-day federal government shutdown, now looks to be back on track again — and accelerating into the new year.
Recent data, especially this week, have been generally positive, indicating that businesses are expanding their hiring and spending. And though consumers still appear somewhat rattled by the fiscal bickering in Washington that led to October's shutdown, the outlook for the recovery has markedly improved since mid-October.
"It looks like the economy is shaking off the uncertainty from Washington, and in 2014 … is finally going to have the wind at its back," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York.
On Wednesday, the Commerce Department said new-home sales jumped 25.4% in October. In the same month, U.S. exports surged 18% to a record high, reducing the overall trade deficit to $40.6 billion from $43 billion in September. Those figures reflected strong rebounds in the housing and manufacturing sectors.
Another report, from payroll firm Automatic Data Processing Inc., showed that the private sector added 215,000 jobs last month, the most in a year and well above economists' estimates.
Also Wednesday, the results of a quarterly survey of top chief executives showed that they were more optimistic about the economy than they had been since early 2012.
Strong confirmation of the trend could come Friday, when the Labor Department releases the November jobs report.
Economists are forecasting a gain of about 185,000 jobs, which would be down from 204,000 the previous month. If the number instead hits about 200,000 again, as some analysts think, it would add to the upbeat news and could open the door for the Federal Reserve to start pulling back on a key stimulus program as early as this month.
The economy added an average of about 200,000 jobs a month from August through October. That's the level Fed officials have said they would like to see sustained before they start reducing their $85 billion in monthly bond buying, one of the extraordinary measures the central bank is using to bolster the slow recovery from the Great Recession.
"If we get another good report, it would not surprise me if the Fed would decide to taper in December," said Erik Johnson, senior U.S. economist at HIS Global Insight, who still expects the central bank to wait until March.
Investors clearly believe that the recent upbeat economic data signal that the Fed's easy-money policies soon will be coming to an end.
Stocks fell Wednesday for the fourth straight day amid concerns that an end to the central bank's bond buying will cause long-term interest rates to rise. The Dow Jones industrial average dropped 24.85 points, or 0.2%, to 15,889.77.
Not all the economic news has been cheery. There have been mixed readings on consumer confidence in the wake of the partial government shutdown. Figures for Black Friday, the conventional start to the holiday shopping season, were lackluster at bricks-and-mortar retailers, though that was offset by record-setting Cyber Monday online sales.
And the Institute for Supply Management's index for the crucial service sector surprisingly fell Wednesday, though it still indicated expansion.
On top of that, Democrats and Republicans in Washington are trying to agree on a spending bill before the government runs out of money again Jan. 15 and on another increase to the debt limit before a February deadline.
Another shutdown could cause the economy to lose the momentum it has picked up the last several weeks, Johnson said.
The October shutdown cost the economy about $12 billion to $15 billion in the last three months of the year and probably caused quarterly growth to fall below a 2% annual rate, he said.
Without additional problems from Washington, the economy would be poised to grow at a 3% annual pace by the end of next year, Johnson said.
Meantime, more chief executives of large U.S. companies said they planned to increase capital spending and hire more employees over the next six months, according to the latest quarterly survey by the Business Roundtable trade group.
"CEOs remain concerned about ongoing uncertainty stemming from the ongoing fiscal stalemate," he said.
McNerney was hopeful about reports that Democratic and Republican negotiators in Congress were close to a budget deal that could avoid another shutdown in January.
The ADP job numbers show that businesses weathered the October shutdown better than many analysts had expected, said Mark Zandi, chief economist of Moody's Analytics, which assists in compiling the payroll firm's monthly report. The resilience is helping the economy end the year strongly.
"If Washington doesn't botch it early next year and keeps the government open and raises the debt limit in a timely way, I think prospects are improving that we will see much better growth in 2014," he said.Copyright © 2015, The Baltimore Sun