USA: Country Economic Forecast: 16 Jan 2012

Oxford Economics
January 16, 2012
10 Pages - SKU: OFE6769218
License type:
Countries covered: United States

The US economy continues to show signs of building strength. The most prominent sign is the apparent improvement in the labor market, but there are also positive readings on the consumer sector, business, international trade and even the housing market. However, there are still some significant constraints on the economy, including major uncertainties over the European financial crisis, and US fiscal policy. And even with improvements there is still a long way to go before consumer confidence, the labor market or the housing sector can be said to be healthy. All remain weak enough that even a relatively mild shock could send them back to the depths plumbed during the recession. The forecast depends on several key assumptions: that Europe manages to contain its financial crisis, that the federal government refrains from shutting down and from imposing more fiscal drag, that oil and other commodity prices remain relatively stable, and that consumers and businesses remain relatively cautious. We believe that growth picked up to about 3.0% in 2011Q4, but that it will slow to an average of just 2.5% in H1 2012. Although we expect an acceleration in H2, increased fiscal austerity will likely cause a stumble at the start of 2013, limiting annual growth to 2.7%, up only slightly from 2.5% expected for 2012.


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