You may not have seen the recent reports … but there was an unexpected jump in new-house construction in December, and an increase in business activity in January. Plus, the US also saw a drop in its dole claims.
Despite these improvements, the full-year 2006 CPI for the US was only 2.5%; compared with last year’s concerning 3.4%.
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The statistics in so far suggest that the US economy is once again expanding at a slow, but encouraging, pace. And that it will not in fact stall, as many economists were predicting.
As such, the Federal Reserve will closely monitor events; and probably maintain an upward bias on US interest rates over the next 12 months.
This will no doubt be the same approach adopted by the Australian Reserve Bank.
