Will the US "double dip"?
Simon Ward
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The consensus expects US GDP growth to slow sharply from a currently-reported 1.9% annualised gain in the second quarter (likely to be revised up significantly next week), reflecting an unwind of tax rebate stimulus. I am more optimistic based on the lagged impact of Fed easing, energy price relief, the stocks cycle, a diminishing drag from housing construction and ongoing trade improvement.
There were glimmers of hope in business and consumer surveys last week. The first of the regional manufacturing surveys released for August – from the New York Fed – reported a significant recovery in expectations for future activity – see first chart. If confirmed by this week’s Philadelphia Fed survey, this could presage an improvement in the national ISM survey over coming months.
Meanwhile, the early August national consumer survey conducted by the University of Michigan showed a further recovery in household perceptions of the housing market: the percentage balance of respondents judging the present to be a good time to buy a home rose to a three-year high – see second chart. However, an increase in mortgage rates following the financial crisis at Fannie Mae / Freddie Mac may delay any impact on activity. 
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