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The US economy now appears to have grown at its strongest rate in 2 years during Q-3, rebounding from a steep downturn that began in December 2007, according to survey of top economists released Saturday. Private economists polled October 5-6 for the Blue Chip Economic Indicators October survey said gross domestic product grew at an annualized rate of 3.2% in the Q, up 0.2 percentage point from what they estimated a month earlier. GDP shrank in Q-2 at a 0.7% annual rate. Q-3 growth was fired by a rebound in personal consumption expenditures, the first increase in residential investment since the final quarter of 2005, and a reduced rate of business inventory reduction, the survey said. Read more

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In China the Government owns the Banks; the bankers do not own the Government. China’s stimulus plan is working better than in the US and the UK because the government is using the banks for public ends, rather than allowing the banks to use the government for private ends. In the USA, the banks are the most powerful lobby on Capitol Hill; they own the Government.

The USA is spending trillions of greenbacks to bail out its banking system, leaving its economy to languish, as China, now called a “miracle economy,” decoupled from the rest of the world, is maintaining a phenomenal 8% annual growth rate. That, by the way, is being questioned by lots of Pols, commentators, economists and other talking heads, as they ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Read more

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Personal income in the US surged in May thanks to an infusion of government stimulus funds, while consumers raised their spending modestly as confidence about the state of the economy continues to improve. Most of the monthly rise was the result of Federal benefit transfers and lower taxes. Americans, still facing rising job cuts and falling home prices have been saving most of the additional funds, lifting the savings rate to a 16 yr high in May. “Households are reverting to a more sustainable spending path vis-à-vis income that allows scope for paying down debt and adding to savings,” said Joshua Shapiro, chief US economist at MFR. Official figures showed last Friday that incomes jumped by 1.4% last month, or US$167.1B, beating economists’ expectations and doubling the previous month’s revised rise of 0.7 %. Personal consumption expenditure rose by 0.3% or US$25.1B last month, in line with estimates, and a rebound from April’s pull-back.

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