government's July employment report on Friday will confirm that the U.S. has added nearly 1.5 million jobs in the past six months.
"I think the economy is starting to hum," says Mark Zandi, chief economist of Moody's Analytics. "The pace of growth is accelerating."
The Federal Reserve raised its outlook Wednesday, saying "economic activity rebounded in the second quarter" and "labor market conditions improved, with the unemployment rate declining further."
Strong job gains are boosting income and spending, says economist Paul Ashworth of Capital Economics. After adjusting for inflation, personal income rose 3.5% in the first quarter and 3.8% last quarter. Meanwhile, rising home and stock prices have made many households wealthier even as their debt levels have fallen.
Although the housing recovery stumbled in the first half of the year, there are signs that sales and construction will pick up. A report this week showed that the rental vacancy rate fell from 8.3% to 7.6% in the second quarter and homeowner vacancy rate dipped to 1.9%, the lowest since the housing crash.
Meanwhile, accelerating job growth is prompting more young Americans living with their parents to start their own households. Both developments should bring at least a modest pickup in home construction in the second half of the year, Zandi says.
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