Fuel and potential fires for the US economy in months ahead


By Martin Crutsinger ,AP

WASHINGTON — The U.S. economy should get better after a sputtering first quarter, but how much better? It’s complicated.

Steady hiring and low gas prices should help power solid growth through the rest of 2015. The harsh winter and a labor dispute that slowed trade at West Coast ports are both over. Home sales and construction are rebounding, along with business investment.

But risks remain: A stronger dollar will likely continue to keep the trade deficit wide. And further cutbacks in oil drilling could depress spending in the energy industry.

Here are three reasons the economy is likely to post solid grow this year, followed by three reasons growth might disappoint. Consumer Rebound

While the overall economy went into reverse, the labor market has been steaming ahead. The U.S. added 223,000 jobs last month, and the unemployment rate dropped to 5.4 percent �X the lowest level since the fall of 2008.

Theoretically, more people working means more income to spend. Economists are forecasting that the modest 1.8 percent growth in consumer spending in the first quarter will climb. And since consumer spending accounts for 70 percent of overall activity, the acceleration will lift economic growth back into positive territory.

Analysts project the overall economy to grow at an annual pace of around 2.5 percent in the second quarter and rev up to 3 percent in the second half of the year. Temporary Soft Patch

Economists believe a lot of the bad things that happened in the first quarter are fleeting.

The Northeast has emerged from the frigid cold and record amounts of snow that hit the region in the first quarter. The winter blizzards that curtailed trips to the mall and auto dealerships could even lead to a surge in pent-up demand in coming months.

A labor dispute that disrupted shipping at many West Coast ports has been resolved, which should alleviate supply bottlenecks that depressed manufacturing activity.

Economists also believe they are seeing signs that business investment is starting to rise after falling for a number of months. Gains in housing construction and sales are also fueling hopes.