OTTAWA, April 23, 2012 /CNW/ - The U.S. economy appears poised for a more stable economic gain of 2.5 per cent this year, up from its fairly weak growth of 1.7 per cent in 2011, according to The Conference Board of Canada's U.S. Outlook-Spring 2012 (http://www.conferenceboard.ca/e-library/abstract.aspx?did=4804).
"Last year at this time, the U.S. economy also appeared ready to take off, only to slump over the summer months. Fortunately, there are some differences between 2011 and 2012, which should enable the U.S. economy to avoid a repeat of last year's slowdown," said Kip Beckman, Principal Economist.
The first reason for optimism in the U.S. economy is that it is an additional year past the nightmare of the 2008-09 recession, and both business and household sentiments are at higher levels than they were in 2011. Second, the European Central Bank has sent strong signals to global financial markets that the continent's banks will not be allowed to fail. As a result, the sovereign debt crisis in Europe is unlikely to have the same effect on the U.S. as it did in 2011.
The U.S. economy generated over 200,000 jobs per month for three straight months through February, before falling back somewhat to 120,000 jobs in March. The unemployment rate of 8.2 per cent in March 2012 is a full 1.8 percentage points lower than the 10 per cent rate at the height of the recession in October 2009. The Conference Board of Canada estimates that the U.S. unemployment rate will drop below 8 per cent by the end of 2012.
The main threat to the U.S. economy over the next few months is gasoline prices. As long as prices do not soar above $4 per gallon, consumers should be able to absorb the costs because of improving labour markets and incomes.
If tensions with Iran over its nuclear program erupt into hostilities, however, oil prices could easily climb to $150 per barrel, with gasoline prices rising above $5 per gallon. If prices remained at these lofty levels for even a few months, the U.S. economy could slip into recession. This forecast assumes that such a scenario will be avoided, and the U.S. economy will remain on track for the remainder of 2012. Buoyed by stronger labour markets, the economy is forecast to grow by three per cent in 2013.
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448
E-mail: [email protected]