US and European Economies Diverging as US Market Gains Momentum

US Economy Going Up

Analysts are predicting that 2012 should be a better year for the US in terms of the economy, even as Europe continues its economic shrinkage along with a great deal of the world.

Positive Feelings

The US has in recent days experienced a surge in confidence, less lay-offs, and improved holiday purchasing, leading economists to have an optimistic view towards the coming year. Maury Harris of UBS Securities and Dean Maki of Barclays Capital both see a growing divergence between the US and European markets, observing that the world’s largest economy is accelerating while the 17-member European market is heading into recession, while growth in emerging markets is slowing.

“There is a sense of decoupling,” said Harris, chief economist at UBS Securities in New York, whose team was the most accurate in forecasting the U.S. economy in the two years through September. “We can still have a decent year here in the U.S. even with the rest of the world slowing down.”

Improved Spending

Fueling the improvement in the US economy is an improved job market and more easily accessed credit and confidence. These forces should help promote more spending among US households, while the debt crisis in Europe forces more “belt-tightening” there. The housing market is also stabilizing, adding strength to the overall economy, while people begin to consider new car purchases now that the economy is on the upswing, helping companies likes General Motors.

Alison Meadows

About Alison Meadows

Alison Meadows has a PHD in Economic Trends in Modern Times and is a known writer who focuses on hedge fund investments. Meadows, her husband, and three kids live in Boston, where she grew up and attended college. Contact Alison at alison[at]businessdistrict.com