Recovery Progressing, But Don't Heighten Expectations

In this article, the author talks about American recovery from the recession, noting the recent reports of 3.2% GDP growth in Q4, up from 2.6% in Q3. Yet this is still relatively small growth, disappointing, as the US is not falling 5.7% short of its potential. Despite this, real demand (GDP minus inventory sales) grew at an annual rate of 7.1%, the highest quarterly rate since 1984. The falling value of the dollar, while somewhat demoralizing, allows for cheaper exportation and thus increases for the US. Increasing exports would help our economy become slightly more balanced between imports and exports, decreasing our trade deficit (if only a little). The article suggests we be cautious, however. High commodity prices threaten to unseat current growth patterns, and potential economic shocks worldwide and in the US could hinder progress.

I find the article to be encouraging overall. It is more balanced in its approach to US recovery, as one might expect from an outside party. I think the idea of discussing real demand instead of simple quarterly percent GDP growth is a smart move. If this kind of demand continues and producers are able to increase the supply, we may see increased growth in our near future. Yet we must be wary of the rising commodity prices--especially food and petroleum. Possible oil spills or natural gas explosions, both sources of economic shock, should be taken into account as well. Seeing as employment is only a meager 1% above post-recession lows, growth in the face of American pessimism will be difficult, but it is certainly not out of reach.