The U.S. economy may return to its
pre-crisis peak next quarter after a recovery former Federal Reserve official
Peter Hooper calls “surprisingly strong, historically weak,” which has seen
corporations and the rich prosper while small companies and the unemployed struggle.
The advance has “substantially
exceeded expectations but remains well behind the norm,” said Hooper, chief
economist for Deutsche Bank Securities in New York. He forecasts the U.S. will grow
by 4 percent in the second quarter and 3.7 percent in the third, lifting gross
domestic product above the $13.4 trillion peak set in the second period of
The economy has expanded an average
3.7 percent a quarter since the middle of last year, two-and-a-half times more
than the median forecast of 58 economists surveyed in June 2009 by Bloomberg
News. That still left first-quarter GDP shy of its previous pinnacle, according
to Commerce Department data — the only time since 1955 the U.S. hasn’t
gained back all the ground lost in a recession during the first nine months of
The recovery has created what
former Fed Chairman Alan Greenspan calls “a bivariate type of economy” in which
some have thrived and others have not.
First-quarter earnings for the 460
companies in the Standard & Poor’s 500 Index that reported results through
May 14 climbed 55 percent from a year ago, with 353 beating estimates of
analysts surveyed by Bloomberg News. The surge in corporate earnings has helped
push up the S&P 500 Stock Index by 68 percent since March 2009, boosting
the net worth of Americans who own shares.
Small companies haven’t fared as
well. More than half reported falling profits in a survey by the
Washington-based National Federation of Independent Business last month.
Unemployment, at 9.9 percent, is
near a 27-year high as employers have cut payrolls by eight million since July
2007. The rate is more than twice the 4.7 percent reported by the Labor
Department prior to the start of the recession in December 2007.
“It’s not just about
Wall Street vs. Main Street,”
said Mohammed El-Erain, chief executive officer of Pacific Investment Management
Co., the Newport Beach, California-based manager of the world’s largest bond
fund. “It’s about large companies versus small companies and wealthy households
versus those less well off.”