Headwinds that could rock the U.S. economy
This post is a guest contribution by Asha Bangalore, vice president and economist of The Northern Trust Company.
The key question about the growth trajectory of the U.S. economy for 2012 is if domestic economic momentum that is visible in bullish economic reports of past – ISM factory survey data, Q4 auto sales, and December employment report – will prevail in the rest of 2012 and offset headwinds from Europe (and its associated ramifications) and the setback from a decelerating trend of business activity in China.
German industrial production fell 1.0% in November, marking the third monthly drop in the last four months. The 3-month annualized decline is 11.7%, the largest since October 2008. These numbers from Germany, the driver of the eurozone, are consistent with expectations of a recession in the eurozone.
Moving to China, the other global economic engine, the year-to-year loan growth was 15.8% in December from 15.6% November, while M2 increased 17.3% from a year ago, the strongest since a year ago see Chart 2. These readings are bullish and we will be tracking them closely.
Source: Asha Bangalore, Northern Trust – Daily Economic Commentary, January 9, 2012.
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