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Cautious welcome to US economic growth

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Cautious welcome to US economic growth

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The US economy grew at an annual rate of four percent in the second quarter. The Government reported that strong business investment led the fastest pace of expansion since early last year. But this rebound in growth is unlikely to be sustained. The crisis in mortgages has disrupted financial markets worldwide and led analysts to scale back estimates for US economic growth in the next few quarters.

Unemployment claims rose unexpectedly. In the past week, Nine thousand more people joined the benefits tally, bringing the total on first time benefits to 334,000. All eyes are now on what the Federal Reserve’s plans are. Some think an interest rate cut would shield the economy from financial turmoil. But the current Federal Reserve Chairman is avoiding his predecessor Alan Greenspan’s tactic of running to Wall Street’s aid with interest rate cuts.

Some blame Mr Greenspan for the current mortgages crisis- by fuelling a housing boom a few years ago and encouraging risk taking.