US economy today

We ´ve known today that the IV quarter  GDP (black line) rose a 3,2% (annualised). In the graph, some indicators that show the US economy is rising gently (Nominal GDP, Industrial Prod), but a lot of productive capacity (red dashed line) is idle.

At the same time, unemployment is falling (red solid line), and external imbalance (green line) is stable at a manageable level.

The signs of idle capacity and high unemployment talk about a certain margin before inflation pressures could appear. Similary, the controlled net imports means that the external finance are in order.

Before the crisis, the Fed did not use to look closely for external disequilibrium. If we enter the variable in the model, probably the potential output would be quite lesser than it is supposed. That is the reason to follow closely BoP: Deficit are financed by foreign capital, which has been a main factor of the crisis through MBS an other toxic products.

FRED Graph

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About miguel navascues
economist. 30 tears in the Bank of Spain following US´ and other economies.

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