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.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk