EUROPE IS BEYOND OUR CONTROL
THE pattern is eerily familiar. We start the year in a blaze of optimism, hoping that the euro zone has been stabilised and that the American economy is growing strongly. By the late spring, the latest example of euro-zone “make and mend” policies shows signs of fraying and the American recovery is proving less robust than hoped. The same description of events applies to both 2010 and 2011.
According to John Maudlin, the endgame is coming for Greece and the eurocrats who have been kicking all those cans down the road, and it will probably be enough to tip the U.S. into another recession. The good news, though, is that after that recession (and who knows how nasty it’ll be,) the whole nasty crisis will be behind us for good, and a new bull market will start.
I disagree. The U.s. economy, while appearing to go into another major slow down, is not. Other signs suggest the economy is strengthening after its early spring lull.
Home construction rose to near a three-year high in April. And factory output has risen in three of the year’s first four months.
The gains, highlighted in data released Wednesday, suggest growth in the April-June quarter is off to a good start.
Consumers are also finally seeing some relief from high gas prices. The average price of a gallon of gas was $3.72 on Thursday, according to AAA. That’s 18 cents less than a month ago.
So consumers should have more money for other purchases, which could also boost second-quarter growth and help lift hiring. Consumer spending drives roughly 70 percent of economic activity in the U.S.