US in the spotlight
Today it is the US that is in the spotlight, with growth revised downwards for the third quarter, according to figures from the US Commerce Department. The previous estimates saw the economy growing at 2.5%, but the new estimate puts this annual growth at a significantly lower 2%. This is nevertheless a marked improvement on the Q2 figure of 1.3%. The downward revision was largely due to restocking by firms being over-estimated previously.
However, the dampened growth figure sits among a slew of other positive data and outlooks. It is anticipated that fourth quarter growth could rise to an annualised rate of more than 3%, due largely to continued restocking and lower fuel prices. And although consumer spending was also revised down (from 2.4% to 2.3%), this is still the quickest pace since the end of last year. After-tax corporate profits have also seen a fillip, rising at a 3% level after rising 4.3% during the second quarter. Export growth was also strong, rising at a better-than-expected rate of 4.3%.
The disappointing growth figure comes on the back of news that a US Congressional Committee, tasked with reducing the deficit by $1.2 trillion, has failed to come to an agreement. This means that automatic cuts outlined in the Bill that originally created the committee should take effect from 2013. The US national debt is now above $15 trillion.
In other news, the Bank of England’s Monetary Policy Committee has warned of the danger posed to the UK by the continuing eurozone crisis, but has also agreed that now is not the time to increase stimulus to the economy. The November minutes said: “While the worst risks had not so far crystallised, the threat of their doing so had increased, exacerbating the already severe strains in bank funding markets and financial markets more generally.”