A new year, a warming economy

With the US economy growing faster than it has in more than a decade, the recovery may finally be broadening to include Main Street America.

The Monitor's View

As 2015 is about to dawn, the US economy is starting to heat up. Really heat up.

And, just as importantly, the benefits of that improving economy may finally be beginning to reach beyond those who were already well-off.

Among the year-end economic good news:

• The US economy grew at a 5 percent rate in the third quarter of 2014, improving on an already robust 4.6 rate the previous quarter. It was the best rate of growth in 11 years, including several years before the 2008 recession.

• The Dow Jones Industrial Average and the broader S&P 500 hit all-time highs Dec. 23, with the Dow crossing the 18,000 mark for the first time ever. The benefits of rising stock prices extend beyond the wealthy into the lives of millions of middle-class Americans, who hold stock funds in their IRA or 401k retirement plans.

• The price of oil is down some 46 percent since its June peak of around $115 per barrel. That’s pushed gasoline prices dramatically lower – and analysts now predict they’ll stay down in 2015. The average driver will save about $550 on gasoline next year, down about 20 percent from this year, according to government forecasts.

• American consumers are more optimistic about the economy than anytime in the past eight years, according to an index monitored by the University of Michigan.

While that good news gives reason for gratitude, the economic upswing still must broaden if it is to improve the lives of all Americans. The wealth gap in the US today between upper-income families and the middle class is the widest in 30 years, according to a December report from the Pew Research Center. The median net worth of upper-income families is nearly 70 times that of lower-income families in the US, also the widest margin in 30 years, the center found.

But the surging economy now may be poised to reach deeper into the US workforce.

"There is a positive feedback loop going on,” says economic analyst Mike Jakeman. "Job creation is running at the strongest rate for 15 years. More people in work means more income, which means more private spending, which means more business investment, which means more hiring."

In addition, many low-income Americans will be getting a modest income boost in 2015. Millions of retirees will see a 1.7 percent bump in their Social Security checks beginning in January, as a cost-of-living adjustment kicks in. And many who work for the minimum wage, such as those at fast-food and retail chains, could see their incomes rise too: Twenty-one states are scheduled to raise their minimum wages in early 2015.

In the dawning new year the US will inherent many unsolved problems, such as the need for healing of racial mistrust and bitterness. A better economy can actually provide part of the solution. Joblessness and poverty are among the underlying causes of many social frictions, which often improve as economic prospects brighten.

The economy today is far from perfect. But, all in all, it represents the best economic news for Americans for many a new year.