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By John Makin
Published: April 11 2011 21:22 | Last updated: April 11 2011 21:22
As the US moves into the second quarter of 2011, it is tempting to make comparisons with a year ago, just before the double-dip scare in the country pushed down global markets and interest rates. Now, US growth estimates are slipping, the Federal Reserve is talking about an exit strategy and external shocks "“ the Arab Spring and Japan's earthquake "“ have boosted macro-economic risks. Furthermore, US fiscal policy is tightening instead of easing.
In contrast to 2010, which saw extra fiscal stimulus in December, forthcoming public spending cuts will lower growth in 2011. The battle over a possible US government shutdown has already cut $40bn from the 2011 budget, shaving about half a percentage point from midyear annualised growth rates. Momentum on reducing the deficit is building in Washington as Congress and the White House consider reform to benefit entitlements.
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