Leading article: The US is out of recession but the misery is not over

There is still little evidence of jobs, confidence or prosperity

Finally, America's deepest and most painful downturn since the Great Depression is over, technically at least. The preliminary estimate that the US economy expanded at an annual pace of 3.5 per cent in the third quarter is marginally better than forecasters expected. That figure may subsequently be revised upwards or downwards. But the broad-based nature of the recovery that emerges from the figures leaves no doubt that after shrinking for the best part of two years, the world's largest economy is growing again (leaving Britain the last of the world's advanced economies still mired in recession). The question is, will this will be a real recovery, that breeds jobs, confidence and new prosperity – or just a statistical curiosity?

There is good reason for caution. The past 12 months have seen government intervention on an unprecedented scale, ranging from the bank bailout and February's fiscal stimulus, to tax credits to boost the distressed housing market, and the recent "cash for clunkers" programme. It would have been astonishing had this support not yielded results. But any return to the pre-crisis times will not come soon, and perhaps not ever. The reasons are both domestic and international. At home, a wounded banking system is still reluctant to lend, despite the huge sums of money still being pumped into the system by the Federal Reserve. An unemployment rate hovering near 10 per cent is also bound to limit the consumer spending that accounts for over two thirds of the total economy. The worst of the lay-offs may be over, but there is little evidence employers are rushing to take on new workers.

More fundamentally, something may have permanently changed in the psychology of ordinary Americans, long the indefatigable global consumers of last resort. The previous boom was financed by unsustainable levels of personal debt, in the shape of credit card spending and cheap, "no questions asked" mortgages that fuelled the greatest housing bubble of modern times. But once bitten, twice shy. Consumers are paying off credit card debt and, mirabile dictu, Americans are actually saving again. That last is admirable, but it does not bode well for a new surge in personal spending, in the immediate future at least.

Any US recovery will also be conditioned by global economic developments. In the past America has benefited from the dollar's role as a reserve currency that in essence has enabled Washington to print money to cover its enormous internal and external deficits. But this fortunate state of affairs may be ending. Signs are multiplying that America's creditors, from China to Gulf State oil producers, are increasingly reluctant to hold depreciating dollar-denominated assets, and may demand a greater return for holding them. This in turn would force the Fed to push up interest rates, braking a nascent and still-fragile recovery.

True, a cheaper dollar has started to boost US exports and chip into the country's huge trade deficit. But this improvement needs to be put on a far more substantial and lasting basis. A lesson of the crisis past is that sooner or later, reality catches up with huge global imbalances. In the immortal words of Herb Stein, once chief economic adviser to President Nixon, "if something can't go on for ever, it won't." If the US is to return to robust and sustainable long-term growth, these global imbalances must be corrected. America will have to cut consumption and export more, while China, in particular, will have to consume more and export less.