US economy is warming up, albeit marginally

US Economy

US Economy

According to latest data available, the US economy has grown by 2.6% in the third quarter on a annualized basis, a little over 2.5 % as previously estimated.

The growth rate however, failed short of the analyst’s expectation of 3%.

The US Federal Reserve in a statement earlier this month said the growth is still too slow to bring about any tangible change in the high unemployment rate.

In an attempt to bring more liquidity in the system, the Fed announced last month that it will inject another $600 billion (£390 billion) in the economy. The fresh dose of liquidity, popularly being called as the QE II – because it’s the second round of Quantitative Easing, will help ease the credit crunch.

The Commerce Department revised third quarter GDP data after it was found that businesses were building their inventories faster.

The industrial growth was somewhat stunted after it was found that consumer spending was down by 0.4% to 2.4%, from a previous estimate of 2.8%.

The Chief Investment Officer at Solaris Asset management, Tim Ghriskey said: “Clearly the economy continues to improve and grow but at a slow, modest pace and that is restraining employment growth and a recovery in the housing market”.

Data released earlier this month showed unemployment rate climbing up to 9.8%, highest since April 2010. A weak housing demand and high unemployment rate is dragging the economy down.

However, consumer sentiments are slowly picking up and analysts are increasingly sounding optimistic. Zack Pandl of Nomura Securities in New York said: “More recent data suggests we’re seeing reasonably healthy retail sales growth, pretty healthy investment spending (along-with) some growth in employment”.

Leave your comment

  • (not published)