September 7, 2007 Treasury Economic Update "Hiring in August came in below where anyone would want it to be, but a broad view of the economy reveals many sources of strength. The unemployment rate remains low, wages are rising, core inflation is contained, business investment has picked up, and strong global growth is boosting Assistant Secretary Phillip Swagel, Job Growth: Employment edged down by 4,000 in August partly due to a large drop in government jobs. Private-sector job growth continued for a 48th straight month, with 24,000 new jobs added in August. The Low Unemployment: The unemployment rate of 4.6 percent is close to the lowest reading in 6 years. Unemployment rates have decreased or held steady in 23 states and the There are Still Many Signs of Economic Strength: Economic Growth: Real Household Spending: Consumer spending has been affected by increased energy and food prices and weakness in the housing sector, but incomes are growing and should continue to support household consumption. (Last updated: Business Investment: Business spending on commercial structures and equipment strengthened in the second quarter. Strong corporate profits and healthy balance sheets bode well for continued investment growth. (Last updated: Exports: Strong global growth is boosting Inflation: Core inflation remains contained. The consumer price index excluding food and energy rose 2.2 percent over the 12 months ending in July. Tax Revenues: Tax receipts rose 11.8 percent in fiscal year 2006 (FY06) on top of FY05's 14.6 percent increase. As a share of GDP, FY07 receipts are projected to be above their 40-year average. (Last updated: Americans Are Keeping More of Their Hard-Earned Money: Real Wages Increased 1.7 percent Over the Past 12 Months (ending in July). This translates into an additional $553 above inflation for the average full-time production worker over the last year. Pro-Growth Policies will Enhance Long-Term We are on track to balance the budget by 2012. The Mid-Session Review of the FY 2008 Budget shows that we are on track to achieve a small surplus in 2012. This year, the deficit is projected to be down to 1.5 percent of
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