US CAUGHT UP IN DEEP RECESSION  The drop in GDP of the United States in Q3 is an indication of a deep recession, Paul Ashworth, senior economist on US at Capital Economics, UK Consulting company said.
“US GDP contracted slightly in the third quarter, shrinking by 0.3% at an annualised pace, but there is much worse to come,” Ashworth said by e-mail.
Analysts of Capital Economics say US economy will endure deep and long lasting recession. Recovery does finally take place, but they expect it to be lacklustre at best.
This week, US Department of Commerce announced figures according to which Americans have cut expenditures dramatically for the last years. In Q3, the US GDP reduced by 0.3% marking the biggest decline for the last ten years. From July to September, the cconsumption fell by 3.1%, marking the first outright decline in 17 years. The disposable income of US population (the money left after paying taxes and credits) fell by 8.7%. Business investment fell by 5.5%, dragged down by the weakness of demand and higher borrowing costs. However, there were still one or two sources of strength in the third quarter. So, in Q3 exports increased by 5.9% and investment in commercial real estate increased by 7.9%. These will also be the next shoes to drop, Ashworth said.
“The collapse in activity in Europe and Asia, along with the dollar's resurgence, suggests that exports will soon begin to contract,” Ashworth said.
Overall, Capital Economics expects US GDP growth to contract by 1.5% in 2009 and remain unchanged in 2010.Azerbaijan, Baku/ TrendCapital, corr A. Badalova |
