The US economy expanded in the fourth quarter of 2012, but only just. The world’s largest economy expanded by just 0.1%, erasing a previously estimated contraction, as the nation posted its smallest trade deficit in close to three years. Economists had been hoping for a 0.5% increase.
The economy struggled to remain expanding as the US saw its biggest decline in the billion dollar defence industry since the Vietnam War. The slow pace of growth has giving the markets extra reason to believe that the Federal Reserve will continue with its asset purchasing programme. Other data released today supported the Dollar and painted an improving picture of the US economy.
“The growth rate is still very pitiful,” said Harm Bandholz, chief U.S. economist at UniCredit Group in New York. “At least, the awkward minus sign disappears.”
The GDP figure was helped greatly by the shrinking of the trade deficit which shrank to $387.9 billion, from the previous $395.2 billion the smallest recorded since 2010.
There was a decline in the number of Americans filing for unemployment benefits and a pickup in the housing sector. Economists are hoping that t creation of jobs mean that companies are looking beyond the looming government spending cuts.
The US economy is now expected to grow by 1.8% this quarter. On Friday we can see volatility creep into the market as the budget cuts known as sequestration take effect.
Current Euro Exchange Rates
As of 15:10 am
The Euro to Pound Sterling (EUR/GBP) exchange rate is trading in the region of 0.8636
The Euro to US Dollar (EUR/USD) exchange rate is trading in the region of 1.3104
The Euro to Australian Dollar (EUR/AUD) exchange rate is trading in the region of 1.2793
The Euro to New Zealand Dollar (EUR/NZD) exchange rate is trading in the region of 1.5797
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