The falling price of oil and the stabilization of the housing market are both good signs. But don't bank on a quick jobs rebound.
WASHINGTON - Despite the recent run of disappointing economic data, a broad range of experts and forecasters expect the economy to improve slightly in the coming months, thanks to lower oil prices and new signs of life from sectors like automobiles and housing.
Call it a firming up, if not quite a comeback.
Economists at many of the most-watched forecasting organizations, both public and private, expect growth to pick up through the summer and into the fall, although only to a pace broadly considered sluggish, if not dismal.
This week, Macroeconomic Advisers, an economic consultancy often cited by policymakers, estimated the annual rate of growth in the second quarter at just 1.2 percent -- well below the pace needed to reduce the unemployment rate. But the firm also projected growth to accelerate to around 2.4 percent in the third quarter.
"The pace of economic growth is picking up, but not to a rate that is very robust," said Joel Prakken, the chairman of Macroeconomic Advisers. "It certainly is no great shakes."
Forecasters, including those at the Federal Reserve, have been overly optimistic at several points during the slump of the past few years, of course. But the recent fall in oil prices and the stabilization of the housing market do give some gravitas to the current predictions.
Thursday, the Labor Department reported that new claims for jobless benefits dropped to their lowest level in four years, at 350,000 a week. Analysts said they were unsure how much of the decline stemmed from an actual improvement, as opposed to temporary factors in the auto industry.
The pace of economic growth will have huge implications for a country still trying to emerge from the worst downturn in 70 years amid a presidential campaign that will most likely turn on the economy.
U.S. growth began to surge in late 2011 and early 2012, before slowing significantly in the spring. Some of the recent headwinds -- like a re-escalation of the eurozone crisis, households paying down their debt and a falloff in growth in big emerging markets -- remain.
With tax increases and across-the-board government budget cuts looming at the end of the year -- unless Congress acts to change the law -- some economic experts are wary.
But other headwinds have started to fade, leading some economists to believe that jobs and growth numbers will track up modestly.
Perhaps most significant is the falling price of oil. Gas prices rose steadily from January through March on concerns over a confrontation with Iran as the United States and its allies cut the producer out of the petroleum market. But tensions have faded, and gas prices have fallen to $3.38 a gallon Thursday from above $3.90 a gallon in April, which has left more money in consumers' wallets and businesses' ledgers. Every penny that the price of gas falls leaves about $1 billion in U.S. pockets over the course of a year, economists estimate.
The lower gas prices "will take a few months to show up" in consumer spending and confidence numbers, said Prakken of Macroeconomic Advisers. But it should lead to higher sales for businesses and greater optimism among households.
Economists pointed to surging new car sales as a good economic indicator: a sign that households are confident enough to make a major purchase and that they are accessing the credit markets.
Moreover, there are accumulating signs that housing has turned around, perhaps auguring a rise in residential investment, an upturn in construction jobs and growing sales.