21 AUGUST 2002
The US economy, generally considered at once the barometer and catalyst for the global economy, appears set to dip into recession once again with the publishing of the index of leading economic indicators, which fell 0.4 per cent in July after a 0.2 per cent decline in June.
The US stock market, still recovering from last month's brutal fall, added to worries in many circles that the recovery from last year's recession remained dubious.
Following the events of 11 September, the US economy had plunged to new depths and brought many economies around the world down with it.
The Maltese economy was not spared the turmoil. Excluding the tourism sector, which had slumped as a direct result of a post-September fear of flying, Maltas manufacturing sector had fallen upon hard times following drastically reduced international demand. Within manufacturing, the electronics manufacturing sub-sector had been the hardest hit and is only now showing signs of recovery.
According to the report issued by the New York-based business research group, Conference Board, six of the 10 forward-looking indicators that make up the index, which include gauges of building permits and factory work-hours, fell with last month's decline being led by drops in stock prices and consumer expectations.
The index has been erratic this year. Over the past six months the index has fallen 0.1 per cent, adding to uncertainty over the US economy's direction.
While consumer surveys carried out recently suggest many Americans are growing increasingly nervous over employment, income and the economy as a whole, the relentless buying of cars and homes have pointed to the contrary.
As such, most economists continue to characterise the recent economic slowdown as an interruption, rather than a derailment, of the recovery. Prominent groups such as the Federal Reserve, the National Association of Business Economics, the biggest group of US corporate economists, and the Conference Board, continue to forecast a resumption of economic growth.
But while Malta and much of the world await more positive signs from the US, it also remains to be seen how Maltas variety of export manufacturers are bracing themselves for another downturn.