Wednesday, June 30, 2004

Happy Days are Here Again

The US recovery continues to pick up steam, as the latest consumer confidence index comes in well above expectations.

US consumer confidence is at a two-year high, according to a survey from a private forecasting group.
The Conference Board said its index of shoppers' confidence rose to 101.9 in June, from 93.1 in May.
This was well above expectations for a reading of 95.0 this month, and the highest since June 2002.
The New York-based group said the new outlook was largely down to an improved jobs situation, and that consumers expected "healthy" economic growth.

Favourable outlook
Consumer spending accounts for two-thirds of all US economic activity.
"Looking ahead, consumers expect the economy to continue to grow at a healthy clip and to continue to generate additional jobs," said Lynn Franco, director of the Conference Board's consumer research centre.
"And with prices at the pump beginning to ease, the short-term outlook remains favorable," she added.
The board said that the percentage of consumers who said jobs were hard to get fell to 26.5 from 30.3, the lowest in 2004, while those saying jobs were plentiful rose to 18.0 from 16.6.
This really is wonderful news, not just for America but for the rest of the world, and as I've said before, it's looking increasingly likely that the upcoming presidential elections will be fought primarily over foreign policy rather than the state of the economy.

What's particularly encouraging is that despite a recent statistical blip or two, the picture in Japan is also looking quite positive on the whole.
Japan's economy expanded at an annualised rate of 6.1% in the first three months of this year, compared with 3.9% in the US.
Japan has been benefiting from strong economic growth in Asia, and particularly in China.
A Finance Ministry report showed last week that the value of Japan's exports exceeded that of its imports by 934 billion yen ($8.6bn) in May, a 35% increase on the year.
That foreign demand has helped to drive growth at a time when Japan's domestic demand is stubbornly subdued.

[............]

Bright spot
The best jobless figures in almost 4 years, however, helped to buoy optimism on Tuesday that consumers will pick up their spending in coming months.
According to the Home Affairs Ministry, the unemployment rate fell to 4.6% in May from 4.7% the previous month.
"The job data was very strong," said Hiroshi Yokotani, an economist at Tokio Marine Asset Management.
"This is the first time the jobless rate has been on a declining trend since the bursting of the economic bubble (at the start of the 1990s)," he added.
With the world's two biggest economies enjoying a revival at the same time, it's reasonable to expect that some of the economic good news will touch Continental Europe as well. Whether the continent's structural rigidities will permit the mass of the unemployed to benefit from the improving global economy is another question altogether.