A Sigh Of Relief For The Economic Status Of The US

In what might be termed as a sigh of relief for the US economy and the Forex globe, a marginal modify in joblessness claim numbers suggested that all is not lost for the US economy. The positive news comes out of a fall in jobless claims filed from 432000 a month ago to 404000 recently. This suggests that some extra Americans have turn into employed and that employment generation has not come to a grinding halt. For the US economy to come back on tracks it is critical that the quantity of unemployed falls, which is the most essential remedy for growing the disposable earnings at the hands of the US consumer and boost demand. A separate report also indicated that the US economic climate grew at an annualized rate of 2% in the third quarter of this year. Even though this is higher than the 1.three% rate of growth for the second quarter, it is still too much less to generate employment in substantial numbers. Having said that, in the least it suggests that the US has managed to stay away from a second recession, which seemed to be a possibility just sometime back.

Other reports recommended that the US trade deficit to $45.61 billion in August from $45.63 billion in July. A falling trade deficit can result either from a fall in imports or a rise in exports. Falling imports would not necessarily be a superior sign as it represents weak demand. Rising exports on the other hand, could provide a enhance to the US economic climate and Forex trading industry and could even be a good improvement. The latter seems to correct and it is the demand from growing economies that is helping US economic growth and acting as a counterbalancing measure to the decreased domestic demand. Having said that, rising economic uncertainty in the Euro region and in the US has produced investors move out of riskier investments to take shelter in the secure have of the US dollar. This has led the US dollar to appreciate, which is not favorable for exports.

The real threat to US recovery now does not seem to be internal as various economic indicators have shown some positivity more than the last couple of months, even though they can be not at their preferred behavior. The actual threat appears to be from the Euro debt crisis and the weak demand from the region as also any economic exposure that the US may have in the region.

Notwithstanding the improved scenario on the joblessness front and the trade deficit, the American customers continued to be bearish in sentiment as could be gauged from the Bloomberg Consumer Comfort Index. Colluding with the sentiment was a fall in consumer goods imports in August, suggesting that the level of consumer confidence is low and consumer spending is constrained.

From the above it appears that the US economic climate wants just a little bit of appropriate stimulus so as to kick commence its economic climate, build demand and employment and lead it to a self feeding cycle, out of the present sticky situation it is stuck in.