Europe’s creditable crisis response has almost been matched by an encouraging report out of the US suggesting that the worst may be behind them, at least in the short term.
Two months back, there was heightened anxiety that America’s economy was lurching back into recession, not helped of course by the uncertainty generated by Europe’s problems. However, the provisional estimate of third quarter GDP growth of 2.5% was comfortably above the 1.3% recorded in Q2 and the 0.4% increase of Q1. Also, the consumer was on reasonable form and business investment continues to do very well. Separately, continuing claims for unemployment benefits dropped almost 100K in the week ended October 15th, a three-year low.
Two months back, there was heightened anxiety that America’s economy was lurching back into recession, not helped of course by the uncertainty generated by Europe’s problems. However, the provisional estimate of third quarter GDP growth of 2.5% was comfortably above the 1.3% recorded in Q2 and the 0.4% increase of Q1. Also, the consumer was on reasonable form and business investment continues to do very well. Separately, continuing claims for unemployment benefits dropped almost 100K in the week ended October 15th, a three-year low.
As always, there are important caveats with all good news stories. For instance, in the most recent quarter, real disposable income dropped by 1.7% at a seasonally adjusted annual rate, which resulted in a slump in the saving rate to just 4.1%. Also, the decline in continuing claims is likely in part to reflect a tightening of eligibility criteria. At times like these, it is hard to know if the glass is half-empty or half-full. Sometimes, perhaps it is both.
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