Edward Hadas & Constantine Courcoulas / Nov 24, 2009, 00:58 IST
BES: There is a recovery, according to most countries’ GDP measures. And the Breakingviews Economic Spot-Check has reached the highest ever level in its 29-week life. But at 2.8, it is still stuck below Stability. It is nowhere near Off to the Races, the top level on the 1-5 scale. The difference between the BES and GDP is that our index tries to catch the whole economic mood, not just the current growth rate. The mood is being darkened by high unemployment and continuing financial worries.
The recovery is too bumpy for comfort. One index showed UK house prices falling. If that persists, the nation’s battered banks could have more trouble. In the US, housing starts declined in October and the Obama administration wants to set aside funds in case of another financial emergency. With unemployment and foreclosures on mortgages still rising, the risk is real.
While lenders to businesses and consumers are worried, optimism is seeping into capital markets. In mid-summer, when the BES was below 2.0 (Slower Decline), it would have been hard to get a bidding war started for Cadbury, the UK confectioner. But US rival Hershey announced last week it was squaring up to go against compatriot Kraft Foods.
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