US growth plummets to 2.4% in Q2
Filed under: Debt, Financial Crisis, Banking
Bad news for the world's biggest economy. US growth has dived from 3.7% in the first quarter of 2010 to 2.4% in the second quarter, according to just-released statistics from the US Commerce Department.The news gave markets a bump with the dollar knocked back and a surge in US bond prices. Responding, the Dow Jones index gave up 0.7% of its value.
Worse than thought
The news won't be a huge surprise to the UK business community with its own hard-won experience of an economy failing to make traction. Worryingly, the new Commerce Department data demonstrates that the US recession was deeper than initially thought. Yet there remains confusing contradictions. The American construction industry, far from being down and out, is actually showing signs of life, particularly domestic construction; business investment is also up.
But significant worry exists about just how much the cost of financial reform will cost, not to mention the looming healthcare reforms. Confidence isn't great from several quarters.
Yet more stimulus?
Still, the thought of handing more money to US banks - many are already making huge profits again - may make many feel queasy (though it has IMF support). Business tax cuts, though, could be another route.The US economy has grown consistently for the last four quarters however. But both the US and the UK need more growth and better productivity to come good. A few more trips to the shops from consumers would also help. Expect markets to remain subdued.
Links (opens in new window)
Shares fall to day lows as US GDP disappoints - Citywire
European shares extend losses after US GDP - MarketWatch
FTSE fades ahead of US GDP figures - Guardian
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