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Wednesday, November 26, 2003

Reality Check

Going back to the fundamental uncertainty mentioned in the last post, these numbers only seem to add to the surreality of things. Oh, I'm not doubting they are real enough: but all this is very much a one extreme to the other type situation. Of course the US has different demographics from the other OECD countries, so of course the labour force can grow more quickly, and of course the US company has leveraged IT productivity and China outsourcing better than it's overseas rivals. But still, 8.2% is enormous: it's just like China. Which brings me back to reality. For if the US performance really is so good and so solid as it seems, why is there all this China preoccupation? Why the nascent protectionism? Something somewhere doesn't add up in all this. Or take the confidence index: a ten point jump in November, just when the extent of the difficulties the US faces in Iraq were becoming apparent, and global terrorism was manifestly on the rise. I haven't got any answer to this, but it is weird, very weird.

The US economy expanded at an annualised rate of 8.2 per cent in the third quarter, its fastest for 20 years, with more investment and inventory-building leading to a steep upward revision in official figures. Government statisticians had initially estimated growth of 7.2 per cent.The revised GDP figures, the strongest since 1984, coincided with more evidence of improving consumer sentiment. The Conference Board's confidence index jumped 10 points to 91.7 in November, its highest level for more than a year.
Source: Financial Times

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