BlogUK To Follow US?

As we all know it has recently been reported that the US economy is starting to show growth for the last quarter. The data, released by the Commerce Department later shows that the US economy expanded by 3% between July and September. However many are saying the growth has been greatly helped by President Obama’s $787bn (£480bn) stimulus package. Now many are concerned that the growth will fall when the impetus comes to an end. The expected growth during the third quarter was also lifted by the government’s popular $3bn cash for clunkers car scrappage scheme.
“It’s good to have the economy growing again,” said Brian Bethune, economist at IHS Global Insight.
“But we don’t think that rate of growth is sustainable because it is distorted by all the government stimulus. “The challenge here is to get organic growth – growth that isn’t helped by fiscal steroids.”
Other analysts point to the continuing high level of unemployment in the US, where the jobless rate currently stands at 9.8%. Any reduction in unemployment typically lags behind an improving economy.
The US entered the current recession in late 2007. While a country’s recession is generally considered to be over after one quarter of economic growth, the US economy will not be officially out of recession until it has been declared by the National Bureau of Economic Research (NBER).
“You can say that the recession is over, but it sure won’t feel like that,” said Dean Baker, co-director of the Centre for Economic Policy Research. “There is a lot of downward momentum that isn’t going to go.” So what does this mean for us in the UK? We all appreciate that we are heavily linked to the US economy, however many economists now believe the UK will take longer than the US to recover. What are your thoughts? Do you feel that more people are talking about recovery, or are many people over reacting to media speculation?