World Economy Indicators

23 July 2003

• The US economy is officially no longer in recession. Indeed, it has not been since November 2001, though it has taken until now to agree when the recovery began.

The National Bureau of Economic Research, the official arbiter of when downturns start and end, last week confirmed that America entered recession in March 2001 and emerged eight months later.

That will come as little comfort to the 81,900 people made unemployed in the ad, publishing and broadcasting sectors since November two years ago – many more, in fact, than the 68,600 laid off during the recession itself.

More significantly, there are fresh signs that the recovery may at last be under way, with the Conference Board’s index of leading indicators rising 0.1% to 111.8 in June. Four of the barometer’s ten components climbed; four – including consumer expectations – fell; and two stayed the same.

Last month’s advance follows a 1.1% hike in May and a 0.1% uplift in April. The last time the index – a guide to the economy’s performance in the near future – rose for three consecutive months was between October 2001 and January 2002.

“It is starting to look and feel and smell like we're going to get more than 2% [year-on-year GDP] growth in the third quarter,” declared Board economist Ken Goldstein.

• The future looks less rosy across the Atlantic, with a new report suggesting the UK economy is “stuck in first gear”.

The Ernst & Young Item Club believes the economy will grow only 1.7% this year, then between 2% and 2.5% in 2004 – well below government forecasts of 2%–2.5% in 2003 rising to 3%–3.5% next year.

Meanwhile, there was more gloom from the British Chambers of Commerce. Although a BCC survey found that both manufacturing and services managed a slight improvement in recent months, the former continues to suffer from foreign competition and the chances of a recovery in the latter are “highly uncertain”.

“Disappointing and worrying is how we would describe these results,” warned BCC economic advisor David Kern.

Data sourced from: multiple sources; additional content by WARC staff