Business Sets Economy's Pace

3/22/2010


Economic growth is picking up in both developed and emerging markets.

U.S. gross domestic product (GDP) rose at an annualized rate of 5.9% in the December quarter, and the consensus among economists polled by Blue Chip Economic Indicators projects roughly 3% growth this year and next year. While the projected growth is low for an economy pulling out of a recession, the U.S. looks pretty good relative to most developed economies. For 2010 and 2011, Japan and Western Europe are expected to grow less than 2%.

ESTIMATED GDP CHANGE
Country
2009
(%)
2010
(%)
2011
(%)
Developed Markets
Canada
(2.6)
2.7
3.1
Eurozone *
(4.0)
1.3
1.9
Japan
(5.2)
1.8
1.5
United Kingdom
(3.2)
1.2
2.1
United States
0.1
3.1
3.0
Emerging Markets
Brazil
(0.2)
5.0
4.5
China
8.7
9.7
9.1
India
7.2
8.1
8.1
Mexico
(6.5)
3.9
3.5
Russia
(7.9)
3.6
4.2
* Group of 15 Western European countries that use the euro.
Sources: Blue Chip Economic Indicators, Dismal Scientist.

Prognosticators expect businesses to lead the U.S. out of recession, with the consensus now projecting 16.3% growth in corporate profits in 2010. However, personal consumption spending is expected to rise 2.1%, reflecting a weak labor market and sluggish wage growth. While a double-dip recession seems unlikely, the recovery could remain fragile until consumers get on board.


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