US makes progress on housing market, jobs

“The giant is finally waking up.”

This is what the financial and investment industry is talking about the recovery of the U.S. economy. Economists say that the U.S. economy finally came to benefit from massive liquidity input into the financial crisis through quantitative easing.

Most significant result is economic growth rate. US GDP which grew 0.1 percent during the fourth quarter of last year made 1.1 percent growth during the first quarter of this year and 1.7 percent during the second.

Employment and housing prices have also turned to recovery. Though the number of jobs created in the month of July is lower than June, the aggregated number of created jobs from January through July was 1,347,000, increase by 83,000 from the same period of last year.

S&P Case-Shiller Home Price Index has increased since January. The index made a 12.2 percent increase year-on-year in May, marking the highest since March 2006. The number of housing transaction also increased in June compared to early this year, with 497,000 for new homes and 5.08 million of existing houses.

Recovery in employment and the housing market means recovery in consumption. Kim Yoon-ki, chief analyst of the macroeconomic analysis team at Daishin Securities, said, “U.S. economy will likely grow in the mid-two percentage range during the latter half of this year.” Lim noh-jung, the head of the investment strategy team at I’M Investment & Securities, also projected, “Recovered consumption will invigorate the manufacture industry, leading to a full-fledged economic growth during the first half of next year.”

Compared to U.S. economy, Europe and China have a hard time to recover. Unemployment rate has maintained its all-time high of 12.1 percent from March to June this year. Meanwhile economic contraction is forecast regarding the Chinese economy due to China’s maintaining its economic focus on the removal of bubbles in the economy.

However, it is too early to predict whether the recovery of U.S. economy will be strong enough to warm up the global economy. Lim Hui-jeong, the head of macro economy office at Hyundai Research Institute, said, “Before the financial crisis, Americans spent a lot. But the atmosphere has changed.”

Though the U.S. economy recovers fully, benefits from the recovery are expected to be different depending on the countries. Kim Hong-dal, director of Woori Finance Research Institute, said, “A country with strong economic fundamentals can recover fast, but those with weak economic fundamentals will have difficulties in recovering for an extended period of time.”