U.S. economy grows 3% in fourth quarter
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Jeremy Hobson: Now let’s get back to the big picture of the U.S. economy. Diane Swonk is chief economist with Mesirow Financial, she’s with us live from Chicago as always. Good morning.
Diane Swonk: Good morning.
Hobson: So Diane, in addition to those good jobless numbers that I reported a minute ago, the government also said that the economy grew 3 percent last quarter. How do you read that?
Swonk: Well that’s what we had already estimated on the U.S. economy and much of that growth came from inventories, from restocking after the Japanese earthquake so some of it’s not sustained but you know, better to get 3 percent than nothing and so we are moving up, the economy has reaccelerated after nearly stalling out in 2011.
Hobson: Square it with what we heard from the Organization for Economic Cooperation and Development, they came out with a report that said the U.S. economy and the European economy are going to diverge this year as the U.S. grows and Europe shrinks.
Swonk: Absolutely. The problem for Europe is, they’re going through deep austerity programs, the periphery is getting very hard hit and there is some spillover into France although we’ve yet to see full effects on Germany. The bottom line is, it’s hard for Europe to keep growing when they’ve had to cut so dramatically to keep their deficits down. We’ve not begun to do that and of course we’re growing more strongly.
Hobson: And have we walled ourselves off from the problems over there yet?
Swonk: We’ve not walled ourselves off, there’s spillover effects because China — Europe is China’s largest client and we ship a lot to China and we’ve already seen exports slow, not only to Europe but more directly to China and so, we are still having some effects of it, it’s just that our domestic economy is holding up better than Europe’s can, under the circumstances.
Hobson: Diane Swonk, chief economist with Mesirow Finanical. Thanks as always.
Swonk: Thank you.