The Banking and Strategy Initiative

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US Economy: A recovery not stalled, A Europe still suffering for longer

English: dark green - IMF members; light green...

English: dark green – IMF members; light green – IMF members not accepting obligations of Article VIII, Sections 2, 3, and 4 of the Articles of Agreement. (Photo credit: Wikipedia)

IMF’s reduction of estimates for US growth dropped US 2012 estimates as well as those for 2013 to 2%  and 2.25% as did all the nine regional Feds when they met in June at the FOMC. The Monthly Redbook report in the mean time has not been as bad as the Goldman report as Chian Stores reported 2.2% same store sales growth for June and will look to a monthly 0.2% sales growth over May

However it seems that despite a good Factory orders for report, interdependencies with Europe are the downfall of growth in both China and USA as far as estimates by the IMF are concerned. The IMF report and everyone else after the Fourth of July Holiday look for increasing investment and a faster housing market recovery to prove a faster pace of recovery  At risk are also zero budget plans of Italy, Spain and even others where slippages may be much greater as the Eurozone contraction feeds itself to forma bigger contraction in the Economy and a EUR120 B groth compact may be followed by more than one round of easing spending restirctions esp if and when Eurobonds are approved instead of just blanket buying by the limited means of the ESM and EFSF

Another set of US Economy’s detractors continue to point to the risk of inflation when TIPS is sold off at negative yield across all maturities showing inflation to be unlikely and in fact raising the specter of deflation with an election in November and a couple of more hacks on the debt ceiling. Bernanke’s forecast for US growth for 2012 is still a healthy 2.4%



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