U.S. rebound constrained by weak consumer spending

OTTAWA , Oct. 15 /CNW Telbec/ - The U.S. economy is slowly turning the corner, but sluggish growth in consumer spending will mean a weaker recovery than the typical rebound following a deep recession, according to The Conference Board of Canada's U.S. Outlook - Autumn 2009.

"The U.S. recovery currently underway is mainly a result of unprecedented monetary policy stimulus and fiscal support for the economy," said Kip Beckman , Principal Research Associate. "Once the impact of the stimulus begins to fade, growth will depend primarily on household spending, which has been constrained by ongoing job losses.

"Thus, we expect growth in real gross domestic product (GDP) to slow over the next six months compared to the anticipated rebound in the third quarter."

Following four consecutive quarters of negative growth, real GDP likely expanded in the third quarter of this year. In the fourth quarter, slightly weaker--but positive--growth is forecast, as the impact of fiscal stimulus begins to wane. For the entire year, real GDP is forecast to decline by 2.6 per cent before rebounding and increasing by 2.3 per cent in 2010--roughly half of the growth that would be expected in a normal recovery.

The U.S. economy continues to lose jobs, albeit at a much slower pace compared with last winter and job creation will likely not resume until the second quarter of 2010. Real household spending is currently below the level that existed last fall and spending is expected to increase by only 1 per cent in 2010.

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