The U.S. economy added nearly a quarter-million jobs in April, a sign that even with a rise in short-term interest rates, the economy is continuing to perform well. The good news for the United States does little to improve the weak outlook for Japan and Europe, the world's second and third biggest economic regions.
The April jobs report for the United States is better than had been anticipated. Roughly, 273,000 jobs were created in April and figures for February and March were revised upward. Some analysts had worried that sluggish stock prices over the past three months were suggesting that rising interest rates were slowing the three percent pace of economic growth. New York economist Lakshman Ashusthan says those fears are off the mark.
"This is not an economy that is falling apart. This is not an economy that is starting a spiral into a very sharp downturn," he said.
U.S. Treasury Secretary John Snow is pleased with the report, regarding it as a sign of continuing economic growth.
"I think we can continue to have good strong non-inflationary growth that creates lots of jobs going forward," said Mr. Snow.
Mr. Snow spoke on CNBC television.
But though the news for the United States seems good, economists continue to be preoccupied by what they see as growing imbalances in the world economy. Raghuram Rajan, chief economist at the International Monetary Fund, believes that the economies of Europe and Japan need to improve.
"The [global] expansion continues to be overly dependent on growth in the United States and emerging Asia, while we still await a sustained recovery in the euro area and Japan,” he explained.
Japan as well as the countries using the euro currency are expected to grow by no more than one percent this year, compared to three percent growth in the U.S. and nine percent growth in China.
Michael Mussa, who used to be the IMF's chief economist and is now a researcher at the Institute for International Economics, is similarly worried about global imbalances. He believes U.S. growth should slow, an action he believes would assist in reducing the U.S. trade or current account deficit because consumers will have less money to buy goods.
"The time will soon need to come when the U.S. trade deficit will stop expanding and begins to contract. And then we will face the problem of how do we constrain growth of domestic demand in the United States below potential output," he added.
Economists are surprised that the U.S. economy is doing so well in the face of oil priced at $50 per barrel and persistent increases in short-term interest rates. Interest rates in America are up two percentage points in the past year while in Europe and Japan they have held steady at low levels.
