WASHINGTON – The United States once again may become a main engine for global growth – and at an opportune time, as Europe slides into recession and Chinas economy decelerates.
An improving job market, rising stock prices and easier credit are combining to lift U.S. consumer confidence and spending, with optimism measured by the Bloomberg Comfort Index near a four-year high. Personal-consumption spending increased by the most in seven months in February, rising 0.8 percent, the Commerce Department said last month.
Were entering a sweet spot for the economy, said Allen Sinai, president of Decision Economics in New York. Were in a self-reinforcing cycle, where faster employment growth leads to higher household income and increased consumer spending.
International companies, including Milans Gianni Versace, already are benefiting. Revenue for the Italian designer will rise at a really strong double-digit pace this year in the U.S., compared with a significant single-digit amount in Europe, Chief Executive Officer Gian Giacomo Ferraris said.
America is doing fantastic, he said last month.
The blossoming of the U.S. expansion comes amid a slowdown in China, until now the pacesetter for the world.
While a purchasing managers index rose to a one-year high in March, according to Chinas logistics federation and the National Bureau of Statistics, analysts said the gain was seasonal. A separate index from by HSBC Holdings and Markit Economics that showed manufacturing contracted and export orders fell last month.
Premier Wen Jiabao cut this years growth target to 7.5 percent last month from an 8 percent goal in place since 2005 as officials seek to shift the economy toward more consumption. Thats down from last years 9.2 percent expansion.
For China and some other emerging economies, the policy goal is to gradually bring inflation down to help achieve a soft landing, Chinese central bank Governor Zhou Xiaochuan said in the southern Chinese island of Hainan.
The 17-nation eurozone, meantime, is flirting with recession after gross domestic product fell 0.3 percent in the fourth quarter, the first contraction since 2009.
Manufacturing contracted in March, and unemployment rose to 10.8 percent in February, the highest in more than 14 years, reports last week showed.
All this means the consumer rebound in the U.S. is a big plus for Europe and Asia, as companies in the two regions will see increased demand for their exports, said Joseph Carson, director of global economic research at AllianceBernstein in New York.