WASHINGTON (AP) — The U.S. economy is showing more strength than at any time since the Great Recession began six years ago.
Employers are hiring. Home prices, sales and construction have surged. Corporate profits and stocks have hit records. And consumers have picked up their spending.
The economy has yet to fully recover from the most devastating crisis since the Great Depression. But it's getting closer — a point President Barack Obama was expected to highlight in his State of the Union address Tuesday night.
By the middle of this year, after years of steady but sluggish improvement, the United States is expected to have finally regained all the 8.7 million jobs lost during the recession, which officially ended 4½ years ago. Many economic forecasters say the economy should grow 3 percent or more this year. That would be its best performance since 2005.
And yet in some ways, the lopsided nature of the half-decade global recovery leaves Obama with little to celebrate. Much of the U.S. labor force has gone without pay increases. Millions have struggled for more than six months to find work. Others have had to accept lower-paying jobs and diminished career prospects.
Forty percent of Americans identify themselves as lower or lower-middle class, according to a survey released Monday by the Pew Research Center. Just 25 percent of the country felt that way in 2008.
The world economy remains fragile. That was driven home this month by the turmoil in emerging economies that sent the U.S. stock market falling after a stunning 2013 rally that rewrote record books.
If the economy does come close to 3 percent growth for 2014, it would mark a solid improvement from the 2.4 percent average annual growth during the recovery so far. On Thursday, the government will estimate economic growth for all of 2013.
Job growth has been remarkably steady in an uneven recovery. Employers have added at least 2.1 million jobs in each of the past three years, creating momentum that could help the economy gain speed in 2014. Each new job puts more money in the hands of people to spend. That's why consistent job growth can give more traction to the recovery. The unemployment rate has plunged from 7.9 percent to 6.7 percent over the past year. That's down from a 10 percent peak in October 2009.
Still, the benefits of more hiring have been muted so far, in part because much of it has been concentrated in the low-wage industries of hotels, restaurants, retailers and temp workers. Also, millions of jobless Americans have stopped looking for work. Once people without jobs stop their searches, they're no longer counted as unemployed. As a result, the unemployment rate can fall in a way that overstates the health of the economy.
In December, for example, the unemployment rate fell from 7 percent to 6.7 percent, its lowest point in more than five years. But that was mainly because a wave of Americans stopped looking for work.
Real estate is rebounding. Home prices have climbed 13.7 percent over the past 12 months, according to a Standard & Poor's index released Tuesday. Sales of existing homes totaled 5.09 million last year, the best such performance since 2006, the National Association of Realtors said last week. Home industry experts say the gains should continue this year, though at a slower pace because higher mortgage rates and home prices will make buying less affordable for some.
— CONSUMER SPENDING
The spending of consumers, which fuels about 70 percent of the economy, is starting to return to its pre-recession levels. The Conference Board said Tuesday that its consumer confidence index rose to 80.7 this month, well above last year's average of 73.3. Retail sales bumped up 4.2 percent in 2013, the fourth straight annual increase. Roughly 15.6 million autos were bought last year, an 8 percent improvement and the highest total since 2007. Historically low inflation and interest rates have kept food and clothing affordable. And according to the Gallup Organization, average daily consumer spending rose $16 to $88 last year.
The Dow Jones industrial average enjoyed a monster 2013, climbing 28 percent. Corporate profits are at their highest share of the economy in the 66 years of tracking by the government. Shares were bolstered by a Federal Reserve bond-buying program that is now being wound down. The eventual end of the program, paired with weak growth in China and troubles in Argentina and Turkey, help explain the 4.1 percent decline in the stock market since the start of this year.