The path ahead for the U.S. economy
Written by A Forex View From Afar on Tuesday, September 09, 2008With the recent economic news and releases coming out of U.S., it seems that the economy is back on track, to a slowdown, of course.
The unemployment number jumped 0.4% in August. This is the second biggest gain since the 1990’s, after May of this year when the unemployment rate jumped up 0.5%. House inventories are at an 11 month high; foreclosures are at 29-year high while mortgage rates are at the same level as when the Fed Funds were at 5.25%. Now, the Fed funds are sitting at 3%, but the mortgages are unaffected.
All this points to the U.S. economy growth rate slowing down once again in the coming quarters. Many have said the economy will resume the growth path after the strong second quarter read. However, it now looks like the main drivers behind the excellent number were the cash rebates, something the economy will not see again in the third and fourth quarters.
Analyst and central banks expect growth to pick up somewhere at the beginning of 2009, but if the U.S. and European economies do not start to show any signs of improvements, the recovery period may extend beyond expectations.
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