Thursday, October 29, 2009

US economy is growing once again

US economy is growing once again
The US economy grew at an annualised rate of 3.5% between July and September, its first expansion in more than a year, official data has shown.

Commentators say the growth was helped by President Obama's $787bn (£480bn) stimulus plan, and the fear is growth will now fall as this comes to an end.
The US economy was also lifted by the "Cash for Clunkers" car scrappage scheme, which finished in August.
But with unemployment still high, the ongoing recovery is set to be slow.
Global good news
The economic growth between July and September indicates that the US has likely exited a recession that first started in December 2007.
However, the official confirmation still has to come from the National Bureau of Economic Research, the agency which considers a number of factors in coming to its decision.
The US economy last expanded in the second quarter of 2008, when it grew 2.4%.
BBC chief economics correspondent Hugh Pym said the 3.5% growth was more than the 3.3% expected by most commentators.
"The sheer scale of the stimulus in the US has made a big difference, it was much bigger in percentage terms than that in the UK," he said.
"That the US, the powerhouse of the world economy is growing once again, is good news for the global economy has a whole."
'Distorted by stimulus'
"It's good to have the economy growing again," said Brian Bethune, economist at IHS Global Insight.
"But we don't think that rate of growth is sustainable because it is distorted by all the government stimulus.
"The challenge here is to get organic growth - growth that isn't helped by fiscal steroids."
Analysts cautious about the slow nature of the US economic recovery point to the fact that the unemployment rate currently stands at 9.8%, and that the labour market traditionally lags behind any wider economic recovery.
They also highlight the fact that the big car firms have already reported a sharp fall in September sales following the conclusion of the popular $3bn cash for clunkers scheme at the end of September.
This scheme gave people trading in old cars $3,500 towards the cost of a new vehicle, pushing car sales up strongly in both July and August.
"You can say that the recession is over, but it sure won't feel like that," said Dean Baker, co-director of the Centre for Economic Policy Research.
"There is a lot of downward momentum that isn't going to go."

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