Just a couple months ago, the weather and the economy were both stuck in the same groove. The bitter cold put the economy into the same deep freeze that the rest of us were enduring, slowing construction, keeping the consumer at home, and just generally making life miserable for much of the country east of the Rocky Mountains.

 

Recently released GDP figures confirm what we all already knew: the bad weather had a real impact on the economy, slowing Gross Domestic Product growth to just 0.1% for the quarter.

 

But somewhere along the way, the weather and the economy started to diverge. This divergence did nothing to help us feel better about the cold. But it did quite a bit to help us feel better about the direction of the economy.

 

As always, a good measure of economic health is the performance of the stock markets. After a pretty steady decline in January, the markets actually started to perk up in February, long before the worst of the winter weather was past.

 

By the last day of April, the Dow Jones had once again hit an all-time high, this time up to 16,580. Explanations for this market rebound are not hard to find. With the worst of the weather behind us, the U.S. consumer came back with a vengeance. Perhaps those long, cold days spent stuck inside created a bit of pent up demand. Household purchases increased 0.5% in February and 0.9% in March. Overall, consumer spending in March increased at the fastest rate in four-and-a-half years.

 

But the best proof of the economy’s mo-jo is the most recent jobs and unemployment reports. The Bureau of Labor Statistics (BLS) released its April jobs report on May 2, announcing 288,000 new jobs for the month. The BLS also revised upward its estimates for March and February, pushing job creation in both of those months above 200,000. Meanwhile, the unemployment report showed a decline in the unemployment rate from 6.7% to 6.3%, the lowest reading since before the onset of the recession.

 

The only bad news in these very encouraging numbers is the fact that the “participation rate” – i.e. the share of the U.S. population in the labor market, declined to 62.8%, the lowest such reading in many years. This is an indication that, while the economy is recovering and jobs are being created, there are still a lot of people out there who feel discouraged about job prospects. For many of these people, more recovery will be needed before they will jump back into the labor force and try to find work.

 

Another indicator of a recovering economy includes a strongly rebounding manufacturing sector which had struggled during the winter months. The widely followed Institute for Supply Management reported an increase in national factory activity from 53.7 in March to 54.9 in April. Any reading over 50 is indicative of anticipated manufacturing expansion, so all of these readings are bullish for the economy.

 

So, if you’re still feeling annoyed about the lingering cold and gray of winter, take some comfort from the heat being generated by our economy. If we’re lucky, the weather and the economy will be back in sync soon – only this time the forecast will be for sunny skies and warm temperatures!