Daily Management Review

Americans disillusioned with the country's economy


02/15/2017


​An average American is gradually becoming disillusioned in the country’s economy. Consumer confidence in the US in January 2017 fell to 111.8 points, which was lower than expected, and the drop is especially noticeable in comparison with the previous figures.



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Analysts are shrugging their shoulders as consumer sentiment is turning negative. Just a month ago, the figures were the record since 2004. Research results indicate that the index value was 113.3 points in December, while analysts expected 113.7 points. The December result was the highest since 2001, according to research organization Conference Board.

However, the experts are asking the population to calm and not to panic: Democrats and Republicans see the economy differently. 

MarketWatch’s survey on average forecast shows a decline in January to 112.9 points.

According to preliminary estimates, Michigan Consumer Sentiment Index, which reflects level of household confidence in the US economy, fell to 95.7 points in February 2017 from 98.5 points in January. However, analysts polled by Reuters expected a smaller decline of the indicator - to 97.9 points from the January mark.

Percentage of Americans who believe that market conditions would improve in the next six months, declined to 23.1% from 24.7%. Not everyone is optimistic: fewer Americans believe that the country will create new jobs in the next six months. The pessimistic sentiment is slowly taking over - now only 19.8% believe that the situation with unemployment will improve, while the figure was 21.7% a month ago. Apart from that, Americans scaled back their ambitions: proportion of Americans waiting for a pay rise in the next six months declined to 18% from 21.5%.

Meanwhile, S&P/Case-Shiller’s index of cost of housing in the US 20 major cities in climbed 5.3% up in annual terms November 2016, after rising by 5.1% in October. Experts are expecting an increase of 5%. Compared with the previous month, the index rose by 0.88% at forecasts of growth by 0.65%.

Against this background, a slight economic upturn in Europe becomes especially noticeable. In 2016, gross domestic product (GDP) in the euro area has finally exceeded US GDP growth after seven years of backlog, as follows from statistical agencies.

According to statistical service of the European Union (Eurostat), GDP of 19 countries united by the single currency rose by 1.7% to an annualized rate in 2016, while GDP of all 28 EU countries - by 1.9%. Previously, the US Bureau of Economic Analysis subordinated to US Department of Commerce reported that in 2016 the country's GDP climbed 1.6% up in 2009 year prices.

Over the past several years, US GDP growth has consistently outpaced corresponding figures of the European Union and the Eurozone. The last time the EU managed to outstrip the US was in 2011 (1.7% vs. 1.6%). It was even later for the Eurozone countries (2008, 0.4% versus minus 0.3%).

Eurostat’s report stresses that Eurozone GDP net of seasonal factors increased by 0.5% compared to July-September 2016, and GDP across the EU - by 0.6% in the fourth quarter 2016. In annual terms, GDP growth of the euro area and the EU in the fourth quarter was 1.8% and 1.9%, respectively.

source: wsj.com






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