News in Charts: The US economy – best of a bad bunch
From the sovereign debt crisis in Europe, to the UK’s double-dip recession and China’s potential hard landing, it is not difficult to find bad news in today’s economic landscape. The financial crisis in 2008 led to the worst economic downturn since the Great Depression, and four years on, it is clear that this has not been a normal recovery. From debt overhangs – both in the public and private sectors – to high levels of joblessness and rapidly aging populations, there is a real risk that the global economy will stay in the doldrums for a while yet. Indeed, Olivier Blanchard, Chief Economist at the IMF, recently noted that we should not expect a real recovery ‘for at least six more years’.
Amidst the gloom, the US stands out for good reasons. Having confronted many of its weaknesses – in the private sector at least – the US managed to navigate the stormy waters of the Global Financial Crisis better than most, and now looks to be in the best position to achieve a more robust recovery. GDP growth is steady, even if not spectacular, while house prices appear to have bottomed out and household debt burdens are approaching more normal levels. The US continues to lead the way in technological innovation and companies have been able to utilise alternative sources of energy such as shale gas. While in contrast to much of the developed world, recent indicators on employment and manufacturing suggest some growth momentum as we head into the final quarter of 2012.
GDP above pre-recession peak
Industrial production growing strongly
Trade imbalances slowly fading
Housing market just about cleared
However – labour market and public debt remain long-term risks
US economy is the best of a bad bunch
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