US Economy Perking up Nicely for the Start of a New Decade

by on

All of a sudden there are multiple datu points around the US economy that indicate a positive trend. Businesses unexpectedly increased their inventories by 0.2% in October, halting a slide of 13 consecutive months of decline. The small gain was set against an expectation of a 0.3% decline, raising hopes that businesses will begin restocking their depleted inventory, helping support the economic recovery.

The trade gap fell to $32.9 billion as exports rose 2.6% according to a Reuters article, the sixth straight monthly gain. Imports rose 0.4%, partly reflecting lower oil imports. “U.S. exports appear to be improving much faster than the domestic economy, suggesting that much of the improvement seen in the manufacturing sector reflects strengthening economic conditions abroad and the impact of the weaker dollar,” said Nomura Securities economist David Resler.

In October, manufactured goods exports were 2.8% higher than in September, with capital-goods exports rising 3.7% over the month, according to the National Association of Manufacturers quoted in the Wall Street Journal. “21 of the 32 capital goods categories showed growth indicates that the export recovery is broadening,” said Frank Vargo, a vice president of  the trade group.

Retail sales in the United States have risen for the second straight month, boosting hopes that a major component of US economic activity is rebounding said an ABC News report. Consumer spending makes up two-thirds of the American economy and is a key to US economic growth. So when the US Commerce Department says retail sales rose 1.3% last month, more than double the 0.6% increase analysts had expected even flat spending in other sectors can’t dampen a positive trend.

A forecast for a 2.4% annualized growth rate in the fourth quarter was unchanged from last month mostly due to economists’ belief that the ‘cash for clunkers’ incentive program, which expired in August, pulled demand for vehicles forward into the third quarter according to a poll carried out by Reuters. Construction is still flat but building materials showed 1.5% growth suggesting DYI may be picking up if home starts aren’t.

All in all a positive end to a horrible year and a good note on which to be starting the new decade.

–Stuart Burns

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.