BASEL (MktNews) - The Group of 10 central bankers gave a relatively optimistic assessment of the prospects for the U.S. economy this year, but warned that risks remained to the central expectation of a weak first half followed by a modest pickup in the second half, Bank of England Governor Eddie George said Monday as spokesman for the group.
The G-10 central bankers "focused a good deal on the U.S." at their regular meeting today, George told reporters.
At their last meeting in January, the central bankers' view had been for one or two quarters of "fairly bumpy" U.S. developments, but that economic prospects should improve again in the second half of this year.
"We are still in the same kind of mood as in January," George said. "The data that we've had since then have been on the whole ... quite encouraging," George said.
"The central expectation is that we are in a slowdown right now, but the outlook is for a pickup in the second half."
George pointed to fourth quarter U.S. GDP data, saying that these were "better than they might have been." He also cited better-than-expected U.S. Feb. employment figures, data for consumer spending -- especially vehicle sales -- in early 2001, as well as the positive contribution of the Federal Reserve's two 50bp rate cuts this year and the U.S. government's plans to cut taxes.
"All of that is consistent with the view ... that the slowdown (in the U.S.) has perhaps been less abrupt than it might have been," George said.
"But there are risks and uncertainties for that central scenario. No one can say that we are finished and can all go home and be happy," George continued. "There are certainly risks that the (overall U.S.) situation could be worse than the central expectation." In particular, George highlighted the weakness of U.S. consumer sentiment. "There certainly has been some weak consumer confidence data," George said. "We can't ignore this."
And while the G-10 central bankers were "encouraged" by the stabilisation of U.S. financial and economic indices, he acknowledged that U.S. share prices have been quite volatile.
In contrast, however, "other financial market indicators have been relatively positive," George said, pointing in particular to bond spreads.
"It is too soon to declare victory," George said, but indicated that the general outlook was not as bad as some had feared.
"I would have expected some weaker numbers for the U.S. economy and the world economy as a whole."
He added: "I would say so far, so good" on the overall global economic situation. -