Americans dare to hope for a happier 2010

First data of new year suggests recovery is on track but job fears persist

The first readings of the New Year from the world's largest economy painted a cautiously optimistic picture yesterday, as policymakers promised to maintain their efforts to sustain the nascent recovery. US manufacturing activity in December came in ahead of expectations, prompting a stock market rally and raising hopes that the economy may soon be creating more jobs than are being lost.

Meanwhile, at the American Economics Association annual conference in Atlanta, Georgia, academics were debating the likely speed and strength of the country's emergence from recession – and whether the recovery is sustainable. GDP is expected to grow by 2.8 per cent this year, but there are significant variations in economists' forecasts.

The December survey of factory purchasing managers, published yesterday by the Institute of Supply Management, showed a reading of 55.9, above the 54.0 predicted by economists and up from 53.6 in November. Readings above 50 per cent represent expansion in activity. The reading was the highest since April 2006.

"This is what we need in 2010 for a V-shaped recovery," said Alan Lancz, president of Alan Lancz & Associates in Ohio. "It's a very positive sign to have the ISM follow-through after months of improvement in leading indicators. Being over the 50 level is important, but having an increase on top of that especially bodes well. Looks like we're off to a fresh start for the year."

By lunchtime in New York the Dow Jones Industrial Average had jumped more than 1.5 per cent, reflecting optimism not just about the manufacturing sector but about employment more widely. The most keenly awaited data this week is the jobs report on Friday, which is expected to show that the economy lost just 8,000 jobs in December, the fewest since the recession began in December 2007. The economy shed 11,000 in November, fewer than expected, reducing the unemployment rate to 10 per cent.

The unemployment data is considered the most important indicator of the economy's path in 2010 because the US consumer accounted for two-thirds of domestic economic activity before the recession hit. Consumer spending and confidence have been battered because of the speed with which employers moved to slash jobs, curb workers' hours and negotiate down pay.

President Barack Obama and Congressional leaders have promised to push through proposals to support job creation in the coming weeks, but the Federal Reserve's deputy chairman, Donald Kohn, warned over the weekend that a reduction in unemployment was likely to be slow.

He told the American Economics Association meeting that banks were still reluctant to lend money for creditworthy businesses to expand, and also repeated the Fed's mantra that interest rates are set to remain low "for an extended period" to allow the recovery to take hold.

Other attendees were less sanguine. Simon Johnson, an MIT professor, said yesterday that by propping up the financial sector, government efforts to date are only delaying another inevitable crash. "The crisis is just beginning," he warned.

Life and Style
life
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
News
Joan Rivers has reportedly been hospitalised after she stopped breathing during surgery
people81-year-old 'stopped breathing' during vocal chord surgery
Life and Style
Chen Mao recovers in BK Hospital, Seoul
health
PROMOTED VIDEO
Life and Style
One in six drivers cannot identify a single one of the main components found under the bonnet of an average car
motoringOne in six drivers can't carry out basic under-bonnet checks
News
news
Environment
Fungi pose the biggest threat globally and in the UK, where they threaten the country’s wheat and potato harvests
environmentCrop pests are 'grave threat to global food security'
News
i100
Voices
Pupils educated at schools like Eton (pictured) are far more likely to succeed in politics and the judiciary, the report found
voices
Arts and Entertainment
Simon Cowell is less than impressed with the Strictly/X Factor scheduling clash
tvSimon Cowell blasts BBC for breaking 'gentlemen's agreement' in scheduling war
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Shady character: Jon Hamm as sports agent JB Bernstein in Million Dollar Arm
filmReview: Jon Hamm finally finds the right role on the big screen in Million Dollar Arm
News
Orson Welles made Citizen Kane at 25, and battled with Hollywood film studios thereafter
people
News
Brad Pitt and Angelina Jolie reportedly married in secret on Saturday
peopleSpokesperson for couple confirms they tied the knot on Saturday after almost a decade together
Sport
footballAnd Liverpool are happy despite drawing European champions
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Head of Marketing (Online & Offline, Media, Digital, Strategy)

£85000 - £100000 per annum: Ashdown Group: Head of Marketing - Slough, Berkshi...

Database Developer (SSIS, TSQL, Microsoft SQL) London Finance

£35000 - £55000 per annum: Harrington Starr: A Global global asset management ...

Web Developer/UI Developer (HTML5, CSS3,Jquery) London

£55000 - £65000 per annum: Harrington Starr: A Global Financial Service Organi...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone