Faster than expected growth in the US in the last quarter, from July through September, has cheered the stock markets today. But for how long? If it means inventories have been growing then this quarter’s growth may suffer. Two point two percent is to be cheered, however, when just weeks before you feared only one point six percent growth.
We are a long way from the heady heights of the first quarter when Europe looked its usual anaemic self but since then there has been a turnaround with EU growth now outstripping the US, and set fair to continue. Keeping things ticking along, in the US as in Europe, is people’s continuing desire to shop. Business investment is also holding up, even if there are acute blackspots, like in the US housing sector, where it is all stop.
A weak dollar, a mixed economic blessing, means free-spending tourists on the rampage in places like New York, but the Fed still warns core inflation is “uncomfortably high”, something a weak dollar will not help., The narrowing trade gap will also have been noted; America sells well abroad when its prices are competitive.