Federal Reserve chairman Ben Bernanke's speech this morning went some way to clarifying the state of the US economy but still leaves some unanswered questions about its fate in the third and fourth quarters of 2010. But I think it is reasonable to assert that the dangers of the US suffering a double-dip recession are abating.
Bernanke was reasonably upbeat, pointing to “preconditions for growth in 2011” being in place and lessening worries about European currency crises coupled with an increase in consumer savings.
The central bank says GDP grew 1.6% in the second quarter of 2010, which was revised down from 2.4% but was still higher than other recent estimates from government officials and economists. And 2011 was looking much better, said Benrnanke, due to impending “stronger household finances, rising incomes and some easing of credit conditions” that would help household spending grow.
Certainly in the world of PR and communications the recovery in fortunes has exceeded the expectations that were in place at the start of the year, and most holding companies are growing at higher rates than the US GDP by some distance. There are fewer indications that clients have been cutting back in Q3 and that they start in Q4.
The US is strong and Asia is in good shape – it is only Europe that still provides some cause for concern.
Clearly it is too early to put the champagne on ice, but cautious optimism would appear to be the watchwords for the rest of 2010.