The US economy, following Asia, will come “alive” this year
The US economy has weathered its worst days over the last two years and, following Asia, will come alive later in Y 2010.
The overall outlook here at EH for the US economy in Y 2010, is for slow, modest and sustained growth with a target of 2.7 to 2.9 % this year.
The limiting factors: the consumer is still over-burdened, corporate balance sheets are still in the process of getting healthier, and there remains the uncertain regulatory and fiscal environment that always makes business cautious in taking on risk and making investments.
US core inflation is expected to decelerate this year in the face of a very wide output gap, and in Y 2011, there will be a modest acceleration in core inflation, but fear remains that inflation may be the only escape from the debt problems.
EH believes that the US Federal Reserve will begin tightening monetary policy later this year or early in Y 2011 that will lift the Fed funds rate to 1.00 during the period.
The US unemployment rate stood at 9.7% as of the end of February as employers shed fewer jobs than expected, according to official statistics, indicating that worse is past and the job market will soon begin to improve. Remember the job market is a lagging indicator and 100% employment is gagged at about 4.7% unemployment in the USA. —Paul A. Ebeling, Jnr. www.livetradingnews.com
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March 12 (Bloomberg) — Treasury Secretary Timothy F. Geithner, offering his most optimistic outlook on the economic recovery to date, predicted the U.S. will rebound from the recession faster and more vigorously than other advanced economies.
“We’re going to come out of this stronger than the other major economies and we’re going to come out more quickly,” Geithner said in remarks today at the Export-Import Bank in Washington. Global growth is expected to be 4 percent this year and next, and “those forecasts seem to be going up,” he said.
Mr. Obama, in a speech last week about his goal to double U.S. exports over five years, urged China to move to a “market-oriented” exchange rate. The U.S. Department of the Treasury in April also must make its semiannual determination of whether to formally label China a “currency manipulator.”
Chinese Premier Wen Jiabao rebuffed international criticism that China had become arrogant and was engaging in triumphalism — charges that were largely flung after the Copenhagen climate-change talks ended without a binding agreement. Wen painted the world’s most populous nation as a country marching toward development against major odds.
Citing the yawning income gap between urban and rural residents and China’s unbalanced economy, Wen said the government had too many domestic issues to address to focus on influencing affairs overseas. China, he said, would always be a passive nation.
“China will never seek hegemony,” Wen said.
The premier was asked about the souring business environment for foreign companies in light of Google’s high-profile threat to leave China and the arrest of employees of the Australian mining giant Rio Tinto last year. He said that China would create a “fair playing ground.”
Wen said China wanted more foreign companies to build research-and-development centers and introduce advanced technology. He also said he would begin meeting with the foreign business community.
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