Data showing a rebound in US growth in the third quarter helped reinforce the belief that the worst is over for the world’s largest economy, but HSBC says a strong third quarter is not “necessarily a precursor” to a strong 2012.
The reason for the bank's negativity is a big draw down in savings in the third quarter by US households which is “something that is less likely to happen in coming quarters” said Kevin Logan, the chief US economist at HSBC in New York in a note to clients.
“Fiscal austerity at the state and local government level will be compounded by prospective cutbacks in spending at the federal level” said Logan, who believes 2012 growth will average a “bit less” than 2.0 percent.
This will not in Logan’s opinion be enough to put a “serious dent” in the level of unemployment .
“All in all, we expect GDP growth to average a bit less than 2.0 percent in the year ahead, not enough to put a serious dent in the current high level of unemployment,” said Logan.
With disposable income falling due to a weak jobs market and inflation , Logan said the draw down in savings witnessed in the third quarter will not last.
“The squeeze on real incomes will restrain the growth of consumer spending, likely holding back the economy’s growth in the year ahead,” said Logan.