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Publication date: 16 April 2012
Author: Michael Derks, FxPro
Growing optimism on US recovery
Last month’s disappointing payrolls report aside, there is a growing body of evidence that the US recovery is looking both more durable and broader-based these days.
For instance, JP Morgan Chase Chief Executive Jamie Dimon suggested on Friday, when announcing his firm’s stellar quarterly earnings results, that the US housing market was “very close to the bottom” and that the debt-service ratio for US households was the lowest in twenty years. He was also upbeat on the state of corporate America, claiming that businesses were cashed up, well-capitalised and generating decent earnings growth. Recently, data published by the Federal Reserve showed that the ratio of liquid assets to short-term liabilities for corporations is now the highest in nearly 60 years!
Wells Fargo, another US banking heavyweight, reported that mortgage applications soared 84% in the year ended March. Both JPMorgan and Wells Fargo are themselves in a strong position, having passed the Fed’s latest stress tests with flying colours and now able to recommence dividend payments to shareholders.
Separately, statistics from the American Bankers Association showed that consumer loan-delinquencies fell in Q4 for the first time since 2004. Additionally, the debt of financial institutions is at its lowest level for ten years.
At the very least, the US economy seems better-equipped to deal with exogenous shocks such as the recent surge in oil prices. Let’s hope so – the world economy desperately needs the US to shoulder the growth mantle these days.