Ottawa, ON — The US economy is still contracting sharply and shedding jobs at an alarming rate, but there are some hopeful signs of recovery amid the gloom, according to The Conference Board of Canada’s US Outlook – Spring 2009.
“There are two signs of life in the US economy. First, consumer spending has actually increased in two of the past three months, a marked improvement from the declines recorded in the second half of 2008,” said Kip Beckman, principal research associate.
“Second, there are faint glimmers of hope in the sector where the economic crisis began – housing markets. Home sales have stabilized, and there are signs that the rate of home price declines is beginning to ease in a few markets.”
The Conference Board forecasts a decline in US real gross domestic product of 2.5% this year. The massive spending by the US Federal Reserve and Treasury is expected to eventually lead to a recovery beginning later in 2009. The US economy is forecast to post growth of 2.1% in 2010.
A sustained recovery won’t occur until consumer confidence, which is linked closely to the state of labour markets, recovers from record-low levels. About 3.3 million jobs have been lost between November 2008 and March 2009, and indications are that job losses are expected to continue for some time to come.
The faint pulse in some sectors of the US economy offers some encouragement for countries — like Canada — that depend heavily on US demand for imports, such as cars and materials for home construction.