US economy in slow recovery, report reveals

 
Ben Southwood
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THE US economy is slowly but steadily recovering, a tranche of releases from official bodies and industry groups said yesterday.

Retail and car sales were driving a gradually growing economy, the Federal Reserve said in its Beige Book report of anecdotal evidence, but they also warned of a slowdown in manufacturing expansion.

And the US grew at an annual rate of 1.7 per cent in the second quarter, revised estimates from the Commerce Department showed, up from their initial 1.5 per cent estimate.

Adding to this positive picture was a two-year high in pending home sales, recorded in July by the National association of Realtors.

But analysts do not think this rules out any announcement of Fed action over the weekend’s meeting of central bankers in Jackson Hole, Wyoming.

“I don’t think this really changes the dovish sentiment of the Fed,” said Michael Hanson at Bank of America Merrill Lynch.

Policymakers are worried about the effects of the ongoing debt crisis, the 2013 so called fiscal cliff of tax hikes and spending cuts, and subdued job growth.

“They are going to look at this and say 1.7 per cent is below trend, that’s not where we want to be and the risks going forward are still material,” Hanson added.

Gold prices dipped to $1,658.30 an ounce, down 1.8 per cent on its opening price, while gold futures fell $8.70 an ounce, to $1,661.

US markets edged higher, but volumes remained thin, indicating investors are unwilling to make major moves so close to Ben Bernanke’s upcoming speech.