One hates to be a party-pooper and after all one is, on the whole, an optimist about the global economy in 2010, but most of the 3.5% US GDP growth rate for the third quarter was down to the government and now the government is, well, broke. This was spelt out in gruesome detail yesterday by our own chairman of the ABC, and former chairman of the ASX, Maurice Newman, in a speech to CEDA. Maurice has for awhile been trying over lunch to denude me, and anyone else within earshot, of any optimism whatsoever, and in yesterday’s speech he laid it all out.
His speech coincided with a new paper currently whizzing around the web from Canadian fund manager Eric Sprott, one of the most alarming bears in the world. Sprott asserts that the US is “on a trajectory to default on their obligations”.
But first, the US third quarter GDP. It was a lot better than expected (3.5%, annualised, versus 3.2) and produced a happy spurt on Wall Street. As one economist put it, it was “the final handful of dirt on the Great Recession’s grave”.
Personal consumption expenditures rose 3.4%, and within that durable goods spending rose 22.3%, most of which was motor vehicles as a result of the
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
