U.S. RECOVERY UNDER PRESSURE DUE TO WEAK EMPLOYMENT GROWTH

www.conferenceboard.ca

OTTAWA, Nov. 4 /CNW/ - The U.S. economy will post modest growth in 2010, thanks to strong investment spending and an increase in exports. However, disappointing job creation and a weak housing sector are still plaguing the U.S. economy, contributing to ongoing uncertainty about the recovery, according to The Conference Board of Canada's U.S. Outlook - Autumn 2010.

During the first half of the year, the U.S. economy was expanding at a healthy three per cent pace. However, growth has now slowed to an annual rate of less than two per cent. The poor performance of U.S. labour markets will continue to dampen real consumer spending, which is expected to increase by only 1.5 per cent this year and a modest 2.7 per cent in 2011. Nevertheless, the U.S. economy is expected to avoid a double-dip recession, growing by 2.7 per cent this year and by 2.9 per cent in 2011.

"Healthy profits from both large and small businesses should alleviate fears that companies will pull back, helping the U.S. economy to avoid sliding back into recession," said Kip Beckman, Principal Economist.

The risks to the outlook are decidedly on the downside, as confidence remains precarious and could easily falter if another Greek-style debt crisis unfolds.

Rising profitability and low borrowing costs have contributed to the more-than-20-per cent gain in investment spending during the first half of the year. Growth in investment spending is expected to slow for the remainder of this year and into 2011. However, it will continue to contribute to overall economic activity, with anticipated real growth of 7.8 per cent in 2011.

Exports are also helping to keep the economy from slipping back into recession. Real exports are expected to increase by 11.5 per cent this year and eight per cent in 2011.

For further information:

Brent Dowdall, Media Relations, Tel.: [phone] ext.  448
E-mail: [email protected]