IIPM-The Indian Institute of Planning and Management

The IIPM Think Tank analyses the five largest economies (excl. China) – US, Japan, Germany, France, UK

 

President Barack Obama recently applauded a government report that indicated the American economy’s rise by 3.2% in the first quarter this year, saying, “This means that our economy as a whole is in a much better place than it was a year ago”. It was the third straight quarterly expansion, even though it was weaker than the 5.6% gain in Q4 2009.

The US Commerce Department confirmed spending rose by 0.6% in March 2010, after a revised 0.5% rise in February. In March, spending adjusted for inflation increased by 0.5% after a similar gain in February. Personal income grew by 0.3% following a 0.1% rise in the month prior, whereas real disposable income expanded by 0.2%. In the spate of increased spending, savings fell at an annual rate of $303.9 billion, the lowest since September 2008. In the 12 months ending March 2010, personal consumption expenditure price index excluding food and energy rose by 1.3%. Thomson Reuters’ Small Business Lending Index (measuring overall level of financing) specified a rise of 4% in March, the highest since October 2007.

The US Labor Department’s monthly snapshot showed US has added jobs for 4 consecutive months, peaking at 290,000 jobs in April, highest in the last 4 years! A contradictory report shows that the unemployment rate has crawled up to 9.9% from 9.7% in March. But there’s a valid reason – the new found confidence has led to a significant increase in the number of people looking for jobs again, who had previously given up. As per government figures, 195,000 returned to work force this year in April. Average work-week was inching to 34.1 hours and hourly wages were also up by 1 cent in April.

European economies have given mixed results. Even though the German economy shrank last year by 5%, experts predict a growth of 1.5% this year (that means an absolute positive shift of 6.5%). Five leading think tanks commissioned by the government provided the silver lining with facts like growth in industrial orders, recovering exports, rise in business confidence, reduced layoffs and unemployment level being at par with the fall of 2008. Unemployment level is expected to dip slightly next year to 7.9% from 8.1% this year, compared to 8.2% in 2009.

Britain’s economy grew by a weaker than expected 0.2% in the first quarter of 2010, a rise of 0.4% over the previous one. Its GDP also shrivelled by 0.3% in the first quarter. France’s GDP dipped by a negative 2.1%, with unemployment at 10.1%.

Although the second largest global economy Japan’s real GDP in 2009 fell by 5%, its GDP actually grew by 4.6% in the last quarter of 2009, which is better than projected by the government’s preliminary report. It has been augmented by export rise in Asia and increased domestic demand supported by government’s incentives. In the third quarter last year, Japan’s economy expanded by 1.1% in absolute terms, which beat the average forecasts of 0.9% quarterly rise, according to Kyodo News survey. This quarter also witnessed a rise in consumer spending to the tune of 0.7%, the highest in last 7 quarters. In December, even though the industrial production grew by 2.2% and capital spending by 1.0%, public investment declined by 1.6%.

With oil prices hovering peacefully around $80 per barrel, with US and Japan leading the way in turning around, EU showing latent promise for the current year, and with the BRIC economies steaming ahead in their growth ambitions, it can be safely said that although pristine recession is over, the effects of the same will continue lingering across economies for the next six quarters at least.
 

Sayan Ghosh

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).  

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Comments
on Aug 03, 2010

rise by 3.2%

Actual - 2.4%

The US Labor Department’s monthly snapshot showed US has added jobs for 4 consecutive months

Temporary Government Jobs - now being shed.

With oil prices hovering peacefully around $80 per barrel,

Now over $81/barrell

with US and Japan

Japan Maybe, but not the US.

Unemployment at 18%.  Taxes set to rise at record historic levels on 1-1-11. 

 

You should have filed this under humor.  Only clowns and politicians could answer this in any way but the negative.

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