WASHINGTON (AP) – After a terrible winter, the economy is improving, with a solid rebound in the spring expected to be followed by stronger growth in the second half of the year.
That’s the view of many economists who think a steadily improving job market will give households more income to spend and boost consumer spending, which drives about 70 percent of the economy.
On Thursday, the government will issue its first of three estimates of economic growth in the April-June quarter, as measured by the gross domestic product. Economists have forecast that GDP grew at a solid 2.7 percent annual rate, according to a survey of economists by data firm FactSet.
The signs of strengthening job gains and expectations of faster growth ahead help explain why the Federal Reserve appears on track to start raising interest rates this year. On Wednesday, the Fed ended its latest policy meeting by keeping a key rate at a record low near zero, where it’s remained since 2008. The Fed said it still needs to see further gains in the job market and feel reasonably confident that low inflation will move back to its 2 percent target rate.
Many economists think the first rate hike will occur in September. Others think it may take the Fed until the end of the year to conclude that the time is right to increase rates for the first time in nearly a decade.