More Data from the U.S. Economy Should Signal Recovery is Undergoing
by ecPulse.com analysis team
ecPulse.com
The U.S. economy continues to show more mixed signals, as activity is yet to be fully restored in the world’s largest economy, where several sectors continue to show signs of stabilization, and accordingly sectors are still showing that the recovery will be bumpy. Meanwhile, more data will be released today from the United States, and expectations signal that recovery is still undergoing in most economic sectors.
The U.S. Labor Department will release the weekly initial jobless claims for the week ending November 14 today; jobless claims are expected to rise by 2,000 to 504,000 from the prior reported estimate of 502K, while continuing claims in the week ending November 7 are expected to continue falling to 5.598 million from the prior reported estimate of 5.631 million.
The U.S. labor market remains on the receiving end of the worst recession since the Great Depression, where unemployment has been rising over the course of this crisis to reach in October a 26-year high at 10.2%, where unemployment will probably continue to rise over the upcoming few months, adding further pressure onto economic growth in the United States.
Rising unemployment alongside tightened credit conditions have been weighing down on economic activity in the world’s largest economy, as income growth remains under pressure and accordingly consumer spending remains weak, which means economic growth will also remain weak since spending accounts for nearly 2/3 of economic activity in the United States.
Moreover, the leading indicators index, which is considered a gauge for future economic activity for the next 3 to 6 months, will be released for the month of October; the leading indicators are expected to rise by 0.4%, following the prior reported rise of 1.0% back in September, since the U.S. economy is still undergoing recovery from the worst financial crisis since the early 1930s.
In addition, the Philadelphia Fed index will be released today for the month of November, Philly Fed is expected to show that activity continued to increase in November, where expectations signal that the index rose to 12.2 from the prior reported estimate of 11.5. This further confirms that activity is indeed recovering, although recovery is rather slow, yet at least there’s some improvement.
The U.S. economy will continue its recovery process well into next year, despite that the economy was able to grow by a staggering 3.5% rate in the third quarter of this year. However, growth was mainly attributed to the ongoing governmental support through the fiscal stimulus plan, which indeed boosted consumer spending, yet with unemployment at a 26-year high, it doesn’t seem that the U.S. economy will be able to keep this momentum.
Economic growth will noticeably ease during the fourth quarter of this year, since the fiscal stimulus effects have started to fade, although the economy will continue to grow, just not over the same pace; unless the fiscal stimulus manages to support spending through the fourth quarter as well.
Meanwhile, Canada will release the wholesale sales index for the month of September; wholesale sales probably rose in September by 1.0%, following the prior reported drop of -1.4% back in August. Moreover, the leading indicators index is expected to rise in October by 0.7% following the prior reported rise of 1.1%, since the Canadian economy is also recovering from the worst financial crisis since the Great Depression.
The Canadian economy has been under huge stress amid the credit crisis, when the economy fell in recession, yet activity started to increase recently as recovery started to kick in; however, it will take some time before the Canadian economy can fulfill its long term growth potentials, as the BOC expects the economy to return to its prosperity in the second half of 2011, since next year is expected to be a recovery year for the Canadian economy, inline with other major economies around the globe…
