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US recession over – or is it?

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by Peter Switzer

It is now official in the USA — the recession is over — and that’s a message the 15 million unemployed Americans might find a little hard to pop a bottle of champagne (or even a can of Bud) over.

That said, the actual announcement of good news of that consequence really is a valuable input into the economic recovery.

The general consensus

The Yanks have a quaint approach to identifying recessions using their National Association of Business Economists (NABE) where 44 professional surveyors are asked: ‘What do you reckon — recession or not?’ Well, it is more professional than that, but it is a cute way of doing it.

More economists are backing a V-shaped recovery on the USA, with Wayne Angell, a former Federal Reserve governor, arguing that US growth is heading for three to five per cent growth.

A long road to recovery

However, it is not a certainty. Professor John Hewson, on my program SWITZER on Sky News Business Channel, still thinks the growth story for Australia could flatten out early next year because he does not think the global economy is going to rebound quickly and help out.

Even some American commentators who can see good growth ahead over the next couple of quarters can see an easing of growth.

Too much, too soon

And this is why Hewson thinks the Reserve Bank is, as he put it, “too bolshie when it comes to raising interest rates so soon”.

Mind you, I still lean to the ‘getting better and stronger for longer’ camp when it comes to the US and our economy, but I do not have the certainty of the RBA. I would have waited until early next year and, if we were in top cruising speed, would have reached for the brake.

No rest for the reporting

But away from the economy and the main game will remain US company earnings and there are some biggies coming up this and next week. And for optimists, Intel came out this morning with some great results beating estimates, particularly on the revenue side and the outlook was promising.

And remember, it will be revenue results that will drive the market higher or lower. They say rust never sleeps but I don’t think money gets much shut-eye!

For advice you can trust, contact Switzer Financial Services.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Wednesday, October 14, 2009