The US economy had been stalled for so long that it was starting to seem like a permanent condition. But no more. In 2014, the economy began expanding, the job market tightened, and unemployment continued to fall.
All that’s missing at this point is for wages to go up and paychecks to get fatter. That hasn’t happened yet for the United States as a whole, but it has happened here in Massachusetts — which is not only a good thing for Bay State residents but perhaps an early sign of what workers elsewhere will find in 2015.
An improving job market
While the headline unemployment rate gets all the attention, there are better ways to measure the strength of the job market. One of them is just to look at the share of people who have jobs (or, even better, the share of people aged 25-54.) That number, called the prime-age employment rate, collapsed during the recession, but it has ticked up over the last 12 months.
In Massachusetts, the trend is even better. The number of working-age folks with jobs is nearly as high as it was before the recession.
Wages rising here, but not everywhere
Usually, when the job market is strong, wages go up. That happened here in Massachusetts in 2014, but so far nowhere else in the United States. The lack of nationwide wage growth has given some economy-watchers reason for doubt, but the jump in Massachusetts may mean that it’s coming soon.
Keeping an economy on track is no easy feat. Stimulate too much and you end up with high inflation. Too little, and there won’t be any growth.
For now, the Federal Reserve is leaning towards stimulus, but 2015 may be the year when strong growth takes hold and it needs to shift in the other direction.
If we’re less lucky, it may also be the year when we’re stymied by some new roadblock. That could be the ongoing collapse of the Russian ruble, the general stagnation in Europe, or a possible slowdown in China.
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