The news that the US economy is officially out of recession is good for everyone:  America still has a disproportionate impact on world business confidence.

This blog always predicted that American optimism would be one of the main engines of global recovery.

Equally, any residual pessimism in the States will be a brake on growth.

So please accept that we are not trying to be negative – only recommending that entrepreneurs who must make investment decisions need to be careful – when we point out that the encouraging GDP figures may not be telling the whole story.   

1   Most commentators are of the opinion that federal spending on programmes that are temporary, or of dubious economic value, or both, is a major factor in the last quarter’s figures – if so, its positive impact will not last.

2   That federal spending is funded by deficits – which means borrowing, which must be repaid.

3   That in turn will mean higher taxes – which, if past experience is any guide, will fall disproportionately on business and on successful entrepreneurs, to the detriment of future growth.

4   Politicians on all sides are reluctant to make hard decisions – thus making those decisions even harder, ensuring that the consequences will be worse when they can be postponed no longer.

5   Most economists agree that unemployment may continue to grow for a while and that the US recovery itself may be “jobless” if jobs lost in the States are replaced in Asia or made redundant by new technology.

6   The danger of inflation remains the elephant in the room.