The U.S. economy is in a far stronger position with factors holding back the growth finally abating, but more work remains to be done to strengthen the uptrend, said the White House in a report on Friday.
In 2012, the recovery continued to make progress, and the economy and American people showed their resilience in the face of several headwinds, said the latest Economic Report of the President, an annual report issued by the White House Council of Economic Advisors.
The report said total nonfarm payroll employment grew by 2.2 million during the year, or roughly 181,000 jobs per month. The unemployment rate, while still elevated, fell 0.7 percentage point to 7.8 percent. Almost the entire drop in the unemployment rate resulted from increased employment rather than labor force withdrawal.
Meanwhile, the real gross domestic product (GDP) expended by 1. 6 percent during the four quarters of 2012, it said.
"The near-term outlook is for further expansion. Consumer spending is rising moderately, as the gradual healing in the labor market lifts income and as households continue to pay off debt and rebuild wealth," the report said.
"A wide array of indicators suggests the housing sector is finally recovering, and the long contraction in the State and local sector appears to be coming to an end," it added.
The White House economists noted that although many of the headwinds that have buffeted growth are receding, some remain. They argued the deficit reduction required to achieve the long- term fiscal sustainability will exert fiscal drag on the economy. In addition, the ongoing budget negotiations on the Capitol Hill will foster uncertainty that could weigh on consumer and business confidence.
"While the immediate budgetary concern in 2013 is the need to replace sequester, it is also important to remain focused on the main driver of our long-term budget challenges: the cost of health care for an aging population," the report noted.
The report also highlighted the main goals of the President's economic agenda, including strengthening the foundations of economic growth by investing in education, research, and infrastructure, and by ensuring fairness for the middle class by reforming the tax code and health insurance system.