Monthly Archives: January 2011

Although US GDP growth has now been positive for 6 successive quarters, unemployment has remain stubbornly stuck at close to a 10 per cent per cent rate throughout that time. Until today, the jobs data each month had poured a dose of cold water on the idea that the economy was embarking on a “normal” recovery. However, the December labour market data, published today, show the unemployment rate dropping to 9.4 per cent. This suggests that the last and most crucial leg of a normal economic upswing may finally be kicking in, although the rise of only 113,000 in private sector jobs was a tad disappointing. Read more

The batch of new year forecasts for the world economy have been almost uniformly positive this year, at least from economists in the financial markets. Only a few months ago, forecasters were talking of increasing risks of a double dip recession, but the surge in risk assets since the Federal Reserve announced QE2 in the autumn has swept away most of this pessimism. JP Morgan this week said simply that “strong global growth is baked in the cake”. Although nothing in economic forecasting is that certain, there is plenty of evidence in favour of the recent outbreak of optimism.

First, the most reliable and timely indicators of global economic activity have recovered strongly in recent months. Although QE2 may have helped somewhat in this regard, it is much more likely that the pause in the global economy was anyway about to end when the Fed took its expansionary decisions in the early autumn. Read more