Is the US economy about to save the world? We all hope so.
It will be an unlikely situation if it does as the economy is not in tip top condition.
But it is about the only major global economy with any growth potential this year, so a lot is riding on the US.
Certainly more and more people believe the US economy will be stronger than Europe and Japan as the year goes on.
We received confirmation overnight of that with an upbeat update from the Organization for Economic Cooperation and Development while the final estimate of 4th quarter US economic growth was an unchanged annual rate of 3%.
Exports were revised downwards, but that was offset by stronger business investment in software.
Consumer spending rose 2.1% in the fourth quarter, unrevised from prior estimates.
Corporate profits before-tax fell 0.4% quarter-to-quarter, down from a 1.2 % rise in the third quarter.
This was the first quarterly decline in profits since the fourth quarter of 2010.
US economists are not as confident as the OECD which sees first quarter growth of 2.9%.
They see growth at 2.1% in the first quarter of this year and won’t pick up significantly from there.
Growth over the course of 2012 is expected to be about 2.5%, and only 2.9% in 2013.
The economists expect job growth to slow slightly, ending with a full-year gain of 2.2 million, or an average of 170,000 a month for the rest of the year, down from the average gain of 255,000 during January and February.
The unemployment rate, which fell to 8.3% in February from 9.1% last August, is expected to only modestly improve to 7.9% by the end of this year.
In an update, the Paris-based OECD said the "forecasts for the first half of 2012 point to a decoupling of GDP growth between Canada and the United States on the one hand, and Europe on the other."
"Robust growth is projected for the former, whereas in Europe the outlook remains weak.
"In the United States growth prospects continue to firm.
"The rebound in equity prices, stronger consumer confidence, and growth in nonfarm payroll employment have lifted projected activity."
In Australia we hope so, a strong US economy will drag in more imports and help China steady.
It could also soften the impact of a tough Federal budget for 2012-13, and weaken the value of the Aussie dollar, relieving pressure on parts of the economy and boosting weakening export income.
"Our forecast for the first half of 2012 points to robust growth in the United States and Canada, but much weaker activity in Europe, where the outlook remains fragile," said OECD Chief Economist Carlo Padoan.
"We may have stepped back from the edge of the cliff, but there’s still no room for complacency," he said.
The OECD projected said that after the 2.9% rate (annual) in the first quarter, growth will ease to a 2.8% rate in the second quarter.
The OECD predicts the eurozone’s three top economies, Germany, France and Italy, will shrink by 0.4% on average in the first quarter, before moderate 0.9% growth recovery in the second quarter.
The group said the UK economy shrank 0.1% in the first three months of the year, meaning Britain slipped back into a recession after a 0.3% fall in activity in the last three months of 2011.
Japan is forecast to expand by an annualized 3.4% in the first quarter and 1.4% in the second.
The OECD said recent economic data suggest the US economy will power ahead of Europe in the first half of 2012, with consumers growing increasingly confident and boosting activity in the former while more reforms are needed in the latter to boost growth, the OECD said.
"Deleveraging by the household sector is underway in the United States," the OECD said.
"However, the housing market is still fragile and negative equity continues to weigh on households."
Unlike the Fed and its chairman, Ben Bernanke, the OCD seems more certain of the US rebound.
"The firmer labour market outcomes and the rebound in equity prices are underpinning the recovery.
"The improved outlook is also reflected in better consumer confidence.
"Other indicators such as motor vehicle sales, industrial production and credit growth also point to a pickup in activity," it added.
The OECD warned, however, that high oil prices, as well as the housing market, which remains fragile, pose a threat to the recovery in the United States.
The first quarter performance will become clearer in a month’s time when the first estimate of GDP is released,. but it would not surprise to see the economy do better than 2%, especially if next week’s March jobs data is solid.
Certainly the US economy is stronger than the UK economy, which contracted by 0.3% in the 4th quarter, according to figures this week.
The NZ economy grew 0.3%, the Australian economy was up 0.4%, but most of Europe contracted.
But there are shoals ahead: the elections in November, more budget fights this year and in 2013, and a growing belief that the three year surge in corporate earnings has ended.
All could end the sharp rebound in the stockmarket and the economy and confidence might take a breather
Certainly America’s the key policymaker, Fed chairman Ben Bernanke is not a strong believer in the stronger for longer argument about the US economy at the moment.
He wants more data on jobs and the economy for longer to be convinced,
