Cecilia Hermansson, chief economist at Swedbank, gives a picture of the economy in the U.S., which currently is difficult to assess from a variety of angles.
The major causes of concern to the United States are the labor-market developments, the deterioration in government finances and the risk of a more prolonged deflationary development à la Japan.
About half of Americans have either received wage reduction or lost part of the job during the past year, now showing that employment rates are at 1999 levels.
A total of just over 111 million Americans work, which has resulted in that the labor market has lost 8 million jobs, and 9 million individuals today are working involuntary part-time.
Wage levels in the private sector has been reduced by 7 percent compared to last year and the link in all statistics shows that a little over 47 percent of all Americans have been affected one way or another during the recession. Either through reduction in wages, shorter weeks or lost jobs.
This industrial development creates a much reduced purchasing power which will affect the speed of recovery and new sources of growth must be developed.
Overall, many years ahead will be difficult in the United States. However, the U.S has the dynamics to deal with the deflationary trend, but despite the historically strong dynamics, structural changes and reforms must be introduced.
The differences in estimates of the U.S. GDP growth for next year are big (0,7-3,9 percent), reflecting uncertainty about the U.S. economy. We are among the more conservative and predicts a GDP growth of around 1 ½ percent. A stronger development over the next year cannot be ruled out, but in 2011 the challenges for the U.S. economy will increase, ends Cecilia Hermansson.
Tony Harken