Despite my forecasts that the US economy would slow sharply after the fastest rise in interest rates and the steepest fall in money supply in 40 years, it hasn't happened. Growth appears to be accelerating. (However, my forecast for a European recession, where, unlike the US, there has been no massive fiscal stimulus, is being fulfilled)
It appears that the federal fiscal stimulus is enough to offset the Fed's deep tightening. So far, at any rate. US GDP growth is the highest in the G20 GDP growth table from Trading Economics (though some data are only available till June). Remarkable. So much for neo-liberalism. Joe Biden has returned us to the 1945-1984 situation where big government works, where fiscal stimulus and deficit spending is used to reduce the severity of economic downturns.
The chart shows the average of the extreme-adjusted PMI and ISM manufacturing surveys for the USA (the service sector surveys for October won't be available for a few days, yet). An average of two statistically independent time series will have lower random month-to-month variability than either on its own. In addition, each series is adjusted for extremes independently before the average is calculated. This average is shown by the green line in the chart below. It shows a rebound over the last few months, with a small dip in October.
No comments:
Post a Comment