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Friday 30th of October 2009
October 29, 2009    

Has the world’s largest economy exited recession?

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by Kay Murchie
Has the world’s largest economy exited recession?

Figures due at 1230 GMT will reveal if the US economy has exited recession.

The US entered the current recession in late 2007 and many analysts believe the world’s largest economy will have exited recession by experiencing positive growth of 3% in the third quarter (according to David Buik at BGC Partners). However, there are fears of a slow recovery.

Many economists believe growth will have been boosted by President Obama’s $787 billion (£480 billion) stimulus package.

Furthermore, growth may have been boosted by the success of the Government’s Car Allowance Rebate System (CARS), branded the “cash for clunkers” scheme.

However, the scheme ended in August and as a result, major car firms experienced a sharp decline in sales in September.

Yesterday, the Commerce Department revealed a fall in the annual rate of US new home sales in September.

According to the Commerce Department, new single-family home sales dived by 3.6% to a seasonally adjusted annual rate of 402,000 homes, down from a revised 417,000 units in August.

It was the first fall in six months and the figures came as a surprise to many analysts. The median sales price of $204,000 (£124,000) was down by 9.1% from $225,200 a year ago.

Also this week, US consumer confidence took a dive in October after the closely-monitored Consumer Confidence Index from the Conference Board fell to 47.7 from a revised 53.4 in September.

It is the second time in two months that the index has fallen and analysts were surprised by the fall after they were expecting the reading to stay the same or to rise slightly.

The index still remains far away from the 90 points required to show that the world’s largest economy is on solid footing.

Last week, it was revealed that the UK had not exited recession in the third quarter as hoped.

Official figures revealed that the UK economy shrank by 0.4% in the July to September period

Major economies such as Japan, Germany, France and Hong Kong all exited recession in the second quarter after experiencing positive growth.

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