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The US$ fell against most major currencies Thursday as US economic growth was stronger than expected in Q-3. Real gross domestic product (GDP) grew a 3.5% annual rate in Q-3, stronger than most expectations, according to the US Commerce Department. It was the 1st increase after 4 Q’s of contraction. The report indicated that US has emerged from its longest and deepest recession in the post-war period. US Senators agreed Wednesday to extend the tax credit for 1st time home buyers and to offer a reduced credit to some repeat buyers. Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan gave their support to the extension Thursday. The credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide, Geithner and Donovan said in a statement. The Euro has been sliding in previous sessions as weak economic reports hurt hopes for recovery. The single currency rebounded Thursday as risk appetite picked up. Read more

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China’s industrial output up 10.8% in July

China’s industrial output rose 10.8% in July from a year earlier, after gaining 10.7% in June, the Chinese National Bureau of Statistics told LTN Tuesday.

It is the second time since September last year that output saw double-digit growth after the government put in place powerful fiscal and monetary policies to boost economic growth.

The July growth rate was 3.9 percentage pts lower than a year earlier level, but 0.1 percentage pt higher than June. The first seven months saw the growth of industrial output at 7.5% from a year earlier, higher than the 7 % for the first half of Y 2009 In July, the output of heavy industry rose 11.3% and light industry was up 9.2 %. Read more

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The Indian Planning Commission is expecting the economic growth rate to marginally move up to 7% in the current fiscal year despite the monsoon casting its shadow on agricultural output, said an official on Tuesday. “I think economic growth during 2009-10 should be between 6.5 and 7% and it will be quite a good outcome,” Planning Commission Deputy Chairman Montek Singh Ahuwalia told reporters here. Noting that the recent pick-up in the industrial sector will have positive implications for growth in the current fiscal, he said, “On the agriculture side, the news is less good than what we hoped.” “There is still deficiency in different parts of the country. It is too early to tell its effect on the country as a whole. But of course individual states can have problems,” Ahluwalia said replying to questions on the impact of the bad monsoon on farm sector growth. Noting that growth projections of various think tanks vary between 6.7 and 7 percent, while some indicating more than 7% economic expansion, he said that this would not be bad under current circumstances. Having grown by over 9% in three consecutive years, economic growth slipped to 6.7% during 2008-09 fiscal year, mainly on account of the impact of the global financial crisis on the country.

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“China’s capital market still has great opportunities in spite of the global financial crisis and unpredictable factors of the capital markets. The central government’s guiding policies, including keeping annual economic growth, expanding domestic demand and restructuring industries, have been a great support for the capital market. The virtual economy has laid a good foundation for the capital market, and the international market change has provided an opportunity for China’s capital market to improve its structure,” said Shang Fulin, President of the China Securities Regulatory Commission. Shang also urged improved supervision, and keeping long-term and healthy development of the capital market.

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Industry managers anticipate the performance of their businesses in a recession. The research shows us that during the 1990–91 and 2001–02 downturns the U.S. consumer prioritized spending instead of actually cutting it in all sectors. Consumer spending did drop in discretionary areas, i.e., dining out, personal care products, and charitable donations, but spending on groceries, reading materials, and other options that substitute for more expensive ones rose, as did spending on insurance, health care, and education. Most analysts do not believe that this world recession will last long time because the financial system is much stronger, and globally linked. The majority view is that the recovery will begin in Q-2/Q-3 2009 and will be well underway by Year End 2009. Note: the classic definition of recession as identified by the National Bureau of Economic Research is two consecutive periods of negative economic growth.

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