Second, the euro area is experiencing a protracted recession and growth in many of the largest emerging economies has slowed. This has resulted in a very sharp slowing of U.S. exports, with an associated slowing in production and employment growth in the U.S. manufacturing sector. Thus, I continue to see the economy as being in a tug-of-war between fiscal drag and underlying fundamental improvement, with a great deal of uncertainty over which force will prevail in the near-term. This tug-of-war is clearly seen in the monthly employment data. Over April and May, the average monthly gain in employment in the private service-providing sector has been well maintained at 175,000. In contrast, employment in the manufacturing sector and the federal government declined a combined 20,000 per month. And the resulting uncertainty is, I believe, an important contributing factor behind the relatively sluggish pace of business investment spending. My best guess is that growth for all of 2013, measured on a Q4/Q4 basis, will be about what it has been since the end of the recession. But I believe a strong case can be made that the pace of growth will pick up notably in 2014. The private sector of the economy should continue to heal, while the amount of fiscal drag will begin to subside. I also see some indications that growth prospects among our major trading partners have begun to improve; for example, the rise in the June euro area composite Purchasing Managers’ Index.
However, growth in New York State has slowed, and Puerto Rico’s economy is not faring well at all; the activity index produced by the Government Development Bank for Puerto Rico shows that the Island’s economy has yet to show any signs of bottoming out. The job situation has varied somewhat across our region. Improvement has generally been broad-based, with New York City and Long Island doing particularly well, though Puerto Rico continues to weaken. Both Connecticut and New Jersey have recently been growing roughly in line with the nation thus far in 2013. Unemployment rates across the region are roughly matching the national rate, with the exception of the relatively high rate that has characterized Puerto Rico’s labor market for some time. Housing continues to be a focus of our regional monitoring efforts and home prices in our region appear to have bottomed. Our economists will elaborate on these points this morning. Are recent college graduates finding good jobs? The special topic of today’s press briefing is a look at how well recent college graduates are faring in the job market, both nationally and here in our region. A college education represents an important investment in one’s human capital, meaning the knowledge and skills people build. Historically, it’s been pretty clear that those who’ve invested in a college education have tended to earn a sizeable economic return. And the benefits of collegeeducated citizens go well beyond the individual.