How Much Slack is in the U.S. Economy?

The past six months would indicate the U.S. economy has bottomed out and begun to turn around. All leading indicators are positive, and trailing indicators are coming in relatively strong, compared to the downturn. However, there is a lot of room for growth. These stats provide some insight into how much the U.S. economy must grow to regain its position as a global leader:

• Hotel occumpancy rates were 56% through July, the lowest since at least 1987.
• An estimated 2,535 aircraft world-wide were in storage in July –14.2% of the world’s fleet. That percentage rivals the months after September 11, 2001.
• 501,472 freight cars were in storage at the beginning of September, roughly one-third of the nation’s fleet.
• 18.7 million homes were vacant in the second quarter, up from 15.9 million four years ago.
• In August, 14.9 million Americans were unemployed, and 26.3 million were underutilized.
• The Fed estimates factories were operating at 66.6% of capacity in August, far below the 79% average over the past quarter-century.

Overall, the Fed believes the U.S. economy could be producing roughly $1.2 trillion more in goods and services than it is currently producing without straining its resources. Investment markets may have potentially already priced in the U.S. economy picking up this slack. If these expectations are not met, the decline in stock market values may not be over.

How do these figures impact your retirement plan? Speak to an independent fee-only financial advisor to determine what you should do to ensure your nest egg is protected and positioned to meet your specific financial needs.