Green shoots for the US economy

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| The European | 2 October 2017

New orders for key US-made capital goods rose slightly more than expected in July and shipments surged, pointing to an acceleration in business spending early in the third quarter which has helped to boost the US economy.

The Commerce Department’s recent report also suggested the US economy continued to gather momentum after growth slowed at the start of the year. Strength in business investment bolsters the case for the Federal Reserve announcement of the plan to start unwinding its massive bond portfolio.

“Growth continues on a solid footing,” said Andrew Hollenhorst, an economist at Citigroup in New York. A December rate hike and further hikes in 2018 remain contingent on increasing inflation.”

“The pickup in business investment is welcome as a sign of the condition the US economy is in, but we would need to see much stronger gains to meaningfully move the dial on productivity growth, and we suspect this is unlikely to happen without corporate tax reform,” said John Ryding, chief economist at RDQ Economics in New York.

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