After a sluggish summer, some Wall Street analysts say the U.S. economy is accelerating in the final months of 2004. They say key drags on economic growth, including a slump in consumer spending and the swelling trade deficit, have eased. Surging oil prices, stagnating retail sales and stalled job growth proved to be a drain on the U.S. economy throughout the summer months of June through August.
But this so-called economic "soft patch" has come to an end, according to David Resler, chief economist of Nomura Securities. "We have come through this soft patch in economic activity apparently, and we believe we have. We think we are going to have growth this quarter of 3.5 percent," he said.
During a media briefing in New York, Mr. Resler blamed the run-up in energy prices and tight consumer spending since March of 2004 for shaving at least one percent of growth from the U.S. economy this year.
He said a cool summer, however, eased energy consumption, consumer spending is picking up and the employment picture has begun to improve.
On the business side, rising corporate profits and lower bankruptcy filings have also contributed to this rosier economic picture, according to Parul Jain, also an economist with the Wall Street firm, Nomura Securities.
"We have a forecast that is suggesting to us that, all right, we are going to get growth, good, solid growth, slightly above trend going into the fourth quarter of the year, and also in to 2005. It is not terribly exciting but it is not terribly low either," he said.
Ms. Jain says in the wake of corporate governance scandals such as Enron and Tyco, American companies have managed to clean out their balance sheets, and have started hiring. A healthier labor market brings wage and salary increases, both of which are tied to increased consumer spending.