By: Dr. Mike Campbell
Preliminary estimates of the US economy put growth in Q4 2011 at 2.8%, however, this figure has now been revised upwards to 3% suggesting that the economy is doing a little better than had been appreciated. According to the US Department of Commerce, the improved figures reflect the fact that consumer spending was stronger than had been anticipated and that business spending cuts were less pronounced than had been expected. The improved growth in the business data was said to be due to companies replenishing sticks that they had allowed to run down previously in anticipation of weaker demand. The data is presented on an annualised basis, but the Q4 growth came in at 0.7% stronger than the Q3 figure when expressed on a quarterly basis. The revision itself is preliminary and will itself be updated in a month’s time.
Federal Reserve Chairman, Ben Bernanke, has described the US economy as continuing to grow, but characterised the expansion as being bumpy and modest. He noted that conditions within the labour market remain far from normal. "The unemployment rate remains elevated, long-term unemployment is still near record levels and the number of persons working part-time for economic reasons is very high" he said. However, he pointed out that the decline in the unemployment figures seen this year has been more rapid than expected, falling to 8.3% in January. The figure had been stuck at about the 9% level for most of 2011.
Bernanke dropped no hints that the Federal Reserve was contemplating a further round of quantitative easing fiscal stimulation. However, his comments were enough to cause the price of gold to relax back somewhat as investors are warming to the idea of speculating on riskier, higher return investments. Maybe!