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US economy outlook


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The US employment situation is improving providing a boost to the economy.

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US economy outlook

  1. 1. US economy outlookI follow US tax receipts which give a rather accurate picture of the state of the realeconomy. Whilst tax receipts from individuals have turned around in November 2009,they started to be positive in May 2010 and have substantially increased for the sixthmonth in a row to January 2011.On the corporate front, the turnaround was in September 2009 and numbers becamepositive in February 2010.All-in-all, tax receipts increased USD 44 billion in FY 2010 (end September) compared toFY 2009, the latter collapsing USD 248 billion with respect to FY 2008. For the first fourmonth of FY 2011, tax receipts are USD 50 higher than in 2010, over 90% of thisimprovement coming form individuals.These tax receipts are matching the (slow) improvement in the US unemploymentsituation: the US added 1 million jobs over 12 months and all indicators were better inJanuary 2011 compared to January 2010 (duration of unemployment, part-time workers 1
  2. 2. economic reasons and no change for discouraged workers). The unemployment rate isdown to 9%.This tells me that consumers are better off and this is translating into other economic datalike retails sales and yoy rate of change is back to historic levels. 2
  3. 3. credit available to consumers has also turned around.If one analyses US Inc. accounts, I would draw three conclusions: • Cash flows are improving and even accelerating • The balance sheet is still plundered with toxic assets • Off-balance sheet is rather awful (non-funded state liabilities)We are not out-the-woods as yet, but trees’ density is reducing.Source:Federal Reserve Bank of St. Louis - Economic Research Department of the Treasury – Daily Treasury Statement 3