Amber Associates – US Heading For Robust Recovery


03 Sep

According to findings from technical analysis carried out by Amber Associates, the U.S. may be heading for a robust recovery as opposed to a so-called New Normal of subdued growth.

Amber Associates have joined a growing number of economic analysts is their belief that the worst recession since the 1930s has created a reservoir of demand that will buoy the economy.

In a statement to shareholders this week, Amber Associates analysts stated that forecasts of 3 percent to 4 percent growth in coming quarters may be too low given pent-up consumer demand. Referring to previous periods of recession, Amber Associates pointed out that the economy has typically had a tendency to bounce back very quickly.

Amber Associates’s outlook contradicts the view popularized by Mohamed El-Erian at Pacific Investment Management Co. that elevated unemployment and record wealth destruction will keep growth at 2 percent or less for years. The divergence highlights the dilemma for policy makers, who must decide whether to maintain record fiscal and monetary stimulus or begin to pull back and prevent a surge in inflation, should growth accelerate.

Recently published retail figures indicate that consumers have yet to ramp up spending. The Commerce Department said purchases fell for the first time in three months, by 0.1 percent. A Labor Department report showed 558,000 Americans, more than forecast, filed claims for unemployment insurance last week; the U.S. has lost 6.7 million jobs in the recession that began in December 2007.

The New Normal theory predicts that the recession will leave unemployment, forecast to reach 10 percent for the first time since 1983 early next year, higher for years. A theory disputed by the Amber Associates analyst team.

Amber Associates counter the new normal hypothesis on the basis that we are not intrinsically compelled to accept high unemployment, highlighting the concerted efforts of the Fed to fight it, as well as recent data suggesting that the rate of unemployment rise is easing.

In the report, Amber Associates say they expect gross domestic product to jump by 3.6 percent in 2010 and 3.9 percent in 2011. Annual growth surpassed 3 percent only once so far this decade, in 2004, and has averaged just 2.2 percent. They cite the key driver for this growth as being home prices, since this will effect every other variable in the equation.

Home construction has subtracted from GDP growth for a record 14 straight quarters through June 2009. Consumer spending has also dropped in four of the past six quarters, and is down 2 percent from its peak in July-to-September 2007, the biggest retrenchment since 1980.

Visit the Author's website: http://www.NEWSWIRE247.NET


Tags: