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The economic recovery is doing just a little better. The Commerce Department announced today that consumer spending has increased by a meager 0.2 percent, which turns out to be actually a negative outcome if adjusted to inflation. The number forces the economists to reconsider some previously optimistic forecast of a 4 percent growth during the second quarter’s GDP. For one year straight, the index measuring personal consumption has risen with 1.8 percent, indicating a minor economic recovery. After approximately two years of incremental growth, it has reached a plateau.
Fortunately, inflation remains under the 2 percent target set by the Federal Reserve. Without expanding consumer spending, though, a low level of inflation is not necessarily a good sign. Both medical spending, as well as wage growth, have been reduced, influencing the inflation’s depression.
A good sign regarding the economic recovery might be the Labor Department’s announcement that the number of jobless claims has dropped by 2000 to 312.000 in the June 21 week. It revolved around the number for a couple of weeks now and is estimated to slightly grow normally in July, due to seasonal activities, The Street reports. The continuing claims’ level has fortunately reached a historical low of 2.571 million, even lower the 2.586 registered on the 3rd of November 2007, which might be looked at a healthy, even though minor economic recovery.
Minor economic recovery through minimum wage increases
These seem to be good news, but the economic recovery still seems incredibly sluggish. As long as there is no consumer spending, growth can hardly be achieved. Against austerity measures supporters claim that raising the wages is a solution to expand consumer purchasing power and overall production of goods and services. We do have a couple of signs toward this.
Seattle is trying to impose a minimum wage gradual raise up to $15 per hour, although it faces strong opposition by the D.C.-based business group, International Franchise Association. The arguments invoque the measure’s discrimination between the local and franchise businesses by considering franchises as large national companies, which are forced to adopt the measure sooner.
Ikea decided as well to raise the minimum wage. Starting with January 1, 2015, the measure will be introduced, while being adjusted to different areas for cost of living. For IKEA it will mean a 17 percent pay change. Both cases lay hopes for the minor economic recovery to grow larger.
