US figures round up for Q2 2010-11
US Q2 GDP growth is expected to be 2.5% which is less than last quarter growth of 2.7%. Many economist fear that US economy is now stalled as it has been showing almost constant growth rate since past three quarter. This means US may be heading towards ‘Low Growth Trap’ if US government does not take proper steps to speed up the recovery. Japan has seen this phase of low growth and deflation with nearly zero interest rates for past 20 years. Federal Reserve Chairman Ben Bernanke has said last week that central bank may take further policy action if the world’s largest economy doesn’t continue to improve. Asian Stock fell today on expectations of weak US economic data.
Job market is still a dismal picture. Number of jobless claims in the week ending July 24, the advance figure for seasonally adjusted initial claims was 457000, a decrease of 11000 from the previous week’s claims but the company payroll rose only by 83000 in June which was less than economists’ expectations. Economy lost 125,000 jobs and unemployment dropped to 9.5% as discouraged workers dropped out of work force.
Inflation adjusted trade deficit stood at $ 45.1 Billion a month for the month of May-June. This was more than the previous month deficit of $42.3 Billion as imports increased faster than the exports.
Manufacturing sector is growing again as companies are increasing their inventories as world economic outlook improves further. Caterpillar, the world’s largest maker of construction equipment raised full year earnings forecast on higher demand from emerging economies. Rebuilding of stocks in warehouses has been the prime reason for the economic recovery in US as inventories were very low during the mid of worst economic crisis after World War II.
US economy has shown signs of recovery and seems to have dumped the fear of double dip but the labour and housing figures are the cause for the pessimism among the American. As the Euro Crisis settles down all the attention is back to the figures of US economy. Host of weak economic data in past few months has caused consumer spending to decrease. Consumer spending accounts for 70% of US economic activity.