US recovery on shaky ground

Meanwhile, business investment remains well down, as are bank lending figures, and despite the Christmas holiday season, consumer spending has been tepid at best.

At the same time, unemployment stands at around 10 per cent, with warnings that that figure could rise yet further before it starts to improve.

Fear

Speaking to Al Jazeera, New York-based economist Max Fraad Wolff said while the US economy was officially out of recession, most Americans still felt very uneasy.

Millions of Americans remain out of work [EPA]

“The feeling in the gut and hearts and minds of most Americans is still one of fear and a lot of less than convinced sentiment about the future of the economy for them,” he said.

Scott Brown, chief economist at Raymond James & Associates, said the report was “a bit disappointing” and suggested “that underlying domestic demand is pretty soft.”

Brown said he expected a jump in growth to at least 4.0 per cent in the current fourth quarter, but added that much of that will come from restocking of business inventories drawn down in the recession.

Looking forward to the coming year, Brown said the economy may grow at around 3.0 per cent “which is good by historical standard but not enough to bring the unemployment rate down substantially.”

“It’s going to take a long time before we’re firing on all cylinders,” he added.

UK slump deepens

Tuesday’s revised US growth figures came as figures from across the Atlantic painted an even bleaker picture, with figures showing the UK economy still stuck in recession.

According to government data GDP shrank by 0.2 per cent in the third quarter, casting further doubt over the country’s recovery.

Britain is now the last major economy still in recession, having now contracted for six quarters in a row.

The slump is Britain’s longest and deepest recession since the end of the World War Two.