Stephen Foley: Recovery: The shape of things to come

US Outlook: My humble contribution to the debate over the shape of the recession. Enough with these Vs, Ls and Ws. It looks to me most like an ice cream cone. The recession began shallow, only to plunge deeper after the post-Lehman Brothers panic. Now we have a very strong snap back, while next year looks a lot more like shallow growth again.

Asian economies are already motoring ahead, and the consensus here is that the US economy has grown at an annualised rate of 3 per cent in the third quarter, with another 2.4 per cent to come in the remainder of the year. If anything, these look conservative estimates. A slide in the number of giant aircraft orders marred the headline durable goods figure for August – down 2.4 per cent, the Commerce department said yesterday – but strip out that volatile component and businesses do seem to be planning long-term investments once again. With inventories dangerously depleted, factories are clanking back to life. In fact, a close look at the reports coming in from regional branches of the Federal Reserve suggest that US manufacturing might be expanding faster than at any point since spring 2006.

That manufacturing revival is independent of government stimulus. It therefore has longevity, which is why a double-dip is unlikely. But traumatised US consumers are not going to go crazy with the credit cards again any time soon, and the cuts that individuals states have made to government spending will surely soon have to be joined by federal programme reductions, too, as Barack Obama's deadline for halving the deficit looms.

On second thoughts, perhaps the ice cream cone is too sweet a metaphor for so sour an economic journey.