US emerges from recession
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The US economy grew at an annual rate of 3.5% in Q3, meaning the country has technically pulled itself out of recession.
The growth figures follow a 0.7% contraction in the US economy in Q2, and beat expectations of 3.2% growth.
Arek Ohanissian, economist at the Centre for Economics and Business Research, questions how sustainable this recovery is, particularly once the US government’s financal resuce package is wound down.
He says: “While we had been expecting for quite some time that growth would come in the second half of this year, it was always expected to be a fragile and sluggish recovery.
“At this point, there has not been any evidence to make us alter that view.”
The US statistics contrast sharply with the growth figures for the UK during the same period.
Figures from the Office for National Statistics last week revealed that the UK economy contracted 0.4% in Q3, despite economists forecasting GDP growth of 0.2%.
Vince Cable, shadow chancellor of the Liberal Democrats, says: “The UK is now one of the last major developed countries still in recession.
“We are now paying the price for a massive over-reliance on the banking sector and a bubble in housing and personal debt which went unchecked by the prime minister for years.
“The recovery we are now seeing in the US is in a good part be down to the positive action the Obama administration has taken to support jobs and build up the country’s infrastructure.
“The return to growth in the US is in stark contrast to the UK and is clear evidence that the billions poured into a meaningless VAT cut has failed.”
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