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U.S. economy faces challenges but optimism remains

U.S. economy faces challenges but optimism remains

The United States faces a number of steep economic challenges to its continued economic growth, but a group of business and policy experts said they believe the Obama administration, working with Congress, can solve daunting short-term issues that threaten to derail economic recovery

Uncertainty about the “fiscal cliff” of scheduled tax increases and spending cuts prompted analysts this month to cut early 2013 U.S. economic growth expectations, a poll showed on Thursday. It was the fourth month in a row they have cut forecasts for next year’s first quarter. Even with the underlying worries, the retail sales in the world’s largest economy are expected to be nearly 4% higher than a year ago during the November-December holiday season. Payroll growth is also expected to pick up slightly.

The eurozone economy officially slipped into its second recession since 2009 despite positive growth in its two largest members. Eurozone GDP contracted by 0.1% in Q3 2012 after falling by 0.2% in the previous quarter. Germany and France achieved growth of 0.2% while Italy’s contraction of 0.2% was less than feared. A further decline in activity is expected in the final quarter of this year as weak household demand drags down intra-Eurozone trade.

On the FX markets, with the confirmation of Eurozone in second recession, the euro seems to have a negative outlook and is losing against the sterling and dollar. GBPEUR trading at a range of 1.2410 – 1.2466

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