Whilst the UK economy hobbled out of recession with a 0.1% increase in the fourth quarter of 2009, the US recorded a more emphatic annualised rate of 5.7%.
The UK figure was actually within error margins so could, after corrections, still end up in negative territory despite the traditionally strong Christmas period. For the US, although ending on an upturn, the overall for the year was a 2.4% shrinkage in the economy.
This is the second positive quarter the US has experienced after they had suffered from four consecutive negative growth quarters. They have recently been boosted by foreign trade and increased business spending. But the worst recession for the US in 70 years is only officially over when the National Bureau of Economic Research says it is.
The recently published Reuters / University of Michigan Consumer Sentiment Index also indicates that Americans are feeling much better about their economy than at any time in the last year. This index is based on telephone interviews with a nationally representative sample of US citizens. The three indexes of consumer sentiment, consumer expectations and current conditions were all up. Although upbeat personal finances were still of concern with unemployment and stagnant income meaning most US consumers will be cautious.
The UK with its 0.1% is in far more uncertain territory. VAT has just returned to 17.5% and there are threats of an increase to 20% to try and help fill the public finances black hole. The car scrappage scheme, which some credit with being the backbone keeping the UK economy afloat, is due to end on 28th February 2010.
On January 18th the Energy Saving Trust started the process of issuing Â£400 vouchers to homeowners who qualify for the Â£50 million boiler scrappage scheme. This may help bolster a small corner of the economy, but the level of response has been immense and the call centre staff have been swamped delaying the whole process.
There are 125,000 of the Â£400 vouchers available and 160,000 have phoned in with 36,000 applications already submitted.
But the UK also has a huge and increasing public sector debt and without growth tax revenues will go nowhere near balancing the books. The pound also looks a very bad bargain, unless that is the Euro comes under pressure due to the Greece (Portugal, Italy, Spain and Ireland) effect. Overall though, Britain is still on very shaky ground with the dark shadow of the threat of a return into recession by the middle of the year hovering in the background.