By: DailyForex.com
America goes to the polls on 6th November to elect its president. According to political analysts, this year’s race is very close and will go down to the wire. Against the backdrop of the global financial crisis, which was already underway when President Obama took office, the US economy will take centre stage in people’s minds.
The Obama camp enjoyed a boost with the release of the Q3 growth figures from the Department of Commerce last week. The data suggests that the US economy grew by 2% in Q3, a stronger performance than many economic analysts had been predicting. Part of the increase was due to greater spending on defence, which rose by 13% over the previous quarter, and governmental gross investment and expenditure which rose by 9.6% over Q2 levels. The Department of Commerce also indicated that personal expenditure (i.e. consumer activity) had also increased over the quarter. Something like 70% of US economic activity is consumed by domestic demand, so an increase in consumer spending is good news.
The long-term unemployment level in the USA stands at 5.8%. Employment is a lagging indicator of the economic cycle. At the moment, 20 million Americans are without work. The figure represents 7.8% of the workforce and is the level that Obama inherited from President Bush when he took over. The US economy has grown in each quarter since Q2 2009, but the growth has been sluggish which explains why unemployment remains stubbornly high. The problem is not limited to the USA, of course, and global demand remains weak. It remains to be seen if the American public will put the US economy in global terms – but it is unlikely – so the question will be if they still blame the Republican party for landing the country in the mess in the first place or if they think Obama should have done a better job of turning the world’s largest economy around by this time.