We got some more positive economic news yesterday when the Federal Reserve released its Beige Book economic report. The report indicates that the recession may finally be over:
Economic activity is stabilizing or improving in the vast majority of the country, according to a new government survey, adding to evidence that the worst recession since the 1930s is over. The Federal Reserve’s snapshot of economic conditions backs predictions by Fed Chairman Ben Bernanke and most other analysts that the economy has started to grow again in the current quarter.
In the survey released Wednesday, all but one of the Fed’s 12 regions indicated that economic activity was “stable,” showed “signs of stabilization” or had “firmed.”
This is merely the latest of many signals indicating an improved outlook for the U.S. economy. Another good sign came last week when the Institute for Supply Management’s (ISM) index of purchasing manager sentiment rose to 52.9 in August from 48.9 in July, crossing the important 50 threshold, which indicates the manufacturing sector is expanding.
The fact that manufacturing activity is picking up bodes extremely well for future GDP growth (the measure of the total value of all the goods and services produced within an economy in a single year). Wall Street’s forecast for GDP growth in the third quarter is now up to 2.9% from 1.6% back in July.
But it’s not just here where forecasts are improving. The International Monetary Fund recently said that it is revising its global growth forecast to just under 3% in 2010, which is up from the IMF’s previous forecast of 2.5% growth. I also want to point out that J.P Morgan economists now expect the euro zone to grow at a nearly 3% annual rate in the second half of this year–substantially higher than their previous forecast of only 0.5% GDP growth less than three months ago.