Attention has shifted to the fiscal cliff of late, with concerns mounting that $600bn in automatic tax increases and government spending cuts could knock up for 4% off US GDP if left unaddressed.
Marino Valensise, chief investment officer at Baring Asset Management, said: “We are convinced that the US will be one of the main drivers of growth in 2013 despite the looming fiscal cliff.
“We expect that the fiscal cliff is resolved relatively easily and quickly in 2013, with little permanent damage to consumer or business sentiment.”
Valensise added that the underlying conditions in the US economy are “considerably better” than any other major developed nation – with major improvements being seen in consumer confidence and the housing market.
Figures published yesterday by the US Conference Board showed its consumer confidence index rose to 73.7 points in November, up from 73.1 in October. This is its highest level since February 2008.
The country’s housing market has also shown strong advances since the troubles of 2007, with affordability steadily improving, mortgage delinquencies declining and oversupply receding.
Jim Leaviss, head of retail fixed interest at M&G, said: “The focus on the fiscal cliff has taken attention away from what we think are extremely positive developments elsewhere in the US economy – and particularly in the housing market.”
Leaviss pointed out that unsold housing inventory has contracted sharply in the US, unwinding the residential property overbuilding that had been seen in the country and reaching a level where housebuilding should resume.
This would have a number of benefits for the wider economy, he noted, leading to an increase in employment and boosting demand for cement, furnishings, trucks and other goods directly or indirectly linked to residential construction.
“We’re now seeing a large number of positive signs in the US housing market and just as the negative multiplier effects spread through the economy when the sector tanked, the reverse might be true next year,” Leaviss argued.
