US and Europe

Nothing positive in the US

Monday May 14, 2012


Try as you might, it’s hard to find positive news out of the United States. We could try and put a positive spin on the numbers: the number of jobless increased in May, but by half the average number in the previous six months. Overall productivity is up, if we ignore the durable goods manufacturing sector, which is imploding by any measure used. And of course, inflation is at zero. In fact, all these indicators leave us wondering whether the stock market and commentators in the US are clutching at straws rather than seeing green shoots.


Unemployment hit 9.4 percent in May up 0.5 percent-points in one month, with 345,000 people losing their jobs. This is about half the average over the previous six months. The unemployment rate has now leapt 4.5 percent-points since December 2007, during the same period New Zealand’s jobless rate rose 1.8 percent-points.


GDP fell at a 5.7 percent annualised rate in the first quarter of 2009. Worryingly, real non-residential fixed investment decreased at an annualised rate of 43 percent. This was mainly the result of lower investment in non-residential structures, but equipment and software investment also plunged. Non-residential investment is down 3.9 percent year on year, with investment in structures up 5.3 percent, and in equipment and software down 8.5 percent. Exports are flat on the year before, while imports have fallen 7.3 percent as consumer spending on durable goods in particular has dried up (down 6.6 percent in the latest year).

Consumer prices have stabilised thanks to a 25 percent fall in energy prices in the last 12 months. Overall, the CPI is down 0.7 percent on the year. However, if energy and food are excluded, then there has been a 1.9 percent rise in the CPI.


 - reprinted from BERL Forecasts June 2009