WASHINGTON (AP) – The US economy flexed its old muscles in 2014.
More than five years removed from the Great Recession, worries had taken hold at the start of the year that perhaps the world’s largest economy had slid into a semi-permanent funk.
But consumers, businesses and investors, after enduring a brutal winter, showed renewed vigor as the year wore on and set the United States apart from much of the world.
Stocks repeatedly set record highs – and did so again Friday, with the Dow Jones industrial average rising modestly to a new peak. Employers were on pace to add nearly three million jobs, the most in 15 years. Sinking oil prices cut gasoline costs to their lowest levels since May 2009. Auto sales accelerated. Inflation was a historically low sub-two percent.
The US economy proved it could thrive even as the Federal Reserve ended its bond buying program, which had been intended to aid growth by holding down long-term loan rates.
All told, the United States remained insulated from the financial struggles surfacing everywhere from Europe and Latin America to China, Japan and Russia.
So what explained the US economy’s resilience this year?
Economists say it largely reflected the delayed benefits of finally mending the damage from the worst downturn in nearly 80 years. Unlike past recoveries that enjoyed comparatively swift rebounds, this one proved agonizingly slow. It took 6 1/2 years to regain all the jobs lost to the recession – 8.7 million – far longer than during previous recoveries.
“It was a healing process from a severe recession and the financial crisis,” said Richard Moody, chief economist at Regions Financial, a bank based in Alabama.
The healing isn’t complete. Wage growth remains lackluster and has barely outpaced extremely low inflation. Home building has been tepid.
But worries earlier this year that the economy might be trapped indefinitely by sluggish growth have largely faded.