While the world economy almost fell into recession earlier this year, leading indicators and money supply data indicate growth will rise in the months ahead, at least in the United States, Europe and China, says Ambrose Evans-Pritchard
, international business editor of The (London) Telegraph.
He cites research from Gabriel Stein of Oxford Economics showing that real global M3 money supply growth--based on the United States, China, The European Economic and Monetary Union, the United Kingdom, Japan and Canada — soared to a six-year high of 6.2 percent in June.
"The M3 gauge tends to lead economic growth by 12 months or so, suggesting that the worst may soon be over," Evans-Pritchard writes.
In terms of U.S. monetary policy, while the Federal Reserve is expected to raise interest rates this year from their record lows, Fed officials have pledged to move cautiously. The central bank's balance sheet stands at $4.5 trillion thanks to massive quantitative easing over the past seven years.
For the world overall, "the chances are that the growth scare of 2015 will prove to be a false alarm," Evans-Pritchard says.
When it comes to the U.S. economy, many Americans don't seem to share his optimism. Gallup's Economic Confidence Index fell to negative 14 for the week ending July 26, a 10-month low and down from negative 12 a week earlier.
The index has gradually slid since peaking at positive 5 in late January, a record high since Gallup began tracking economic confidence daily in 2008. The weekly numbers have consistently stood in negative territory since mid-March.
Gallup's Economic Confidence Index averages two components: how Americans view the economy currently and whether they see it improving or getting worse.
The current conditions component slid 4 points in the latest week to negative 9. The economic outlook component registered negative 18, unchanged from a week earlier. The economy grew 2.3 percent in the second quarter.
So what's causing the pessimism?
"A number of factors may be affecting how Americans view the direction of the country's economy, including unsettled economic conditions in Europe and in China and the volatility of the U.S. stock market," writes Rebecca Riffkin of Gallup
"All of these could be making Americans — particularly those with higher incomes- more pessimistic."
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