The U.S. economy hasn’t yet gone over to the dark side

The U.S. economy deteriorated in the fourth quarter. Stock markets have gotten smacked around in early 2016. And the latest snapshot of the labor market is likely to show a steep pullback in hiring in January. That’s the Darth Vader view of the economy.

And the Luke Skywalker perspective? Most economists believe the U.S. has hit another soft patch but that underlying growth remains sound, fueled by the creation of 12.5 million jobs in the past five years. Wages are creeping higher, gas is cheap, home sales are rising, auto sales are at record highs and Americans are going out to eat a lot more. “The improvement in jobs markets is trumping the weakness in stock markets,” said Ryan Sweet, a senior economist at Moody’s Analytics.

The importance of what consumers do cannot be understated — their spending drives more than two-thirds of all U.S. economic activity. Last year consumers boosted spending at the fastest pace since 2005.

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