Economy to show stamina as global growth slows

The United States economy is gaining momentum and should push through next year with only a few bruises despite an almost certain European recession and slower global growth, Reuters reported.A firming in the anemic US Labour market should put the economy in reasonable shape to withstand headwinds from overseas, although the recovery will likely slow at the start of the year after a surprisingly solid fourth quarter.The US economy will be one of the better stories in an otherwise gloomy global economy next year, said Sung Won Sohn, an economics professor at California State University in the Channel Islands.It will not go into recession.Data from employment to manufacturing imply US growth will top a three per cent annual rate in the fourth quarter, which would be the fastest pace in 18 months.Much of that expansion reflects the release of pent-up demand for autos and a restocking of inventories by businesses, temporary factors that could lead to a lull early in 2012.But a healing labor market provides a signal of a more-lasting and fundamental strengthening of the recovery.The jobless rate fell to a 2-1/2 year low of 8.6 per cent in November and first-time claims for jobless benefits have dropped to the lowest level since early 2008.Thats good news for the consumers who drive two-thirds of US economic activity.The consumer is going to be able to spend simply because job growth is picking up, said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. As job growth picks up, income picks up.Many economists now look for growth of between 2.3 per cent and three per cent in 2012, even given the clouds overseas.While far from stellar, that would mark an acceleration from an expected two per cent expansion this year and it could offer some mild relief to President Barack Obama, whose handling of the economy is key to his re-election hopes.The debt crisis in Europe and bickering over budget policy in Washington are the biggest threats.The key question is whether the economy will be allowed to run on its own internal dynamics, said Anthony Karydakis, chief economist at Commerzbank in New York.A political stand-off over extending an expiring payroll tax cut and benefits for the long-term unemployed had raised the risk a fiscal brake would abruptly slow the economy at the start of the new year.However, lawmakers on Thursday announced an agreement to continue the provisions for two months, setting up a decisive vote in the House of Representatives on Friday.
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