Hamish McRae: On the streets of New York, I sense a recovery...

It is good sometimes to get out of Europe, and a short trip to New York reminded me that though the eurozone is a pretty big chunk of the world economy, the US is a somewhat larger one. While there is still a huge personal debt overhang in the States and the banking system remains under the cosh, there are several signs of life a-stirring in the real economy that show through both in the stats and in the streets.

The streets first. New York is not America, of course, and you would expect a recovery to take hold here first but, despite the difficulties of its financial services industry, the city does seem to have made some sort of turnaround. The hotels are full. The streets are jam-packed with shoppers. Mid-town shops have benefited from the clever revamping of Times Square, which has created a new public space in what was until recently a nasty traffic junction. The big department stores had a good "Black Friday" 10 days ago, the traditional start to the festive shopping season. The music in Bloomingdales has switched to "Jingle Bell Rock". The bars are full; the taxis are busy.

For the US as a whole, the statistics confirm a recovery, albeit an uneven one. Growth is coming in at around 2 per cent this year and the live debate in the States is how hard that will be hit next year if, as is now expected, the eurozone does indeed go back into recession. But consumption has been not too bad, car sales are up, and the consensus is that this final quarter will show some growth. There was the pleasant surprise last week of a sharp fall in the unemployment rate to 8.6 per cent – the lowest since March 2009. November was the fifth consecutive month when employers had created more than 100,000 new jobs.

Hamish McRae

Prominent Economist and Futurist

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But, if you stand back from the minutiae of the data and look for signs of a big turning point, the thing that I feel is most interesting is the housing market. That was where the catastrophe began and it is where it will end. Up to now, every little upward tick in the residential market has been quickly squashed, and in many cities in the US the market is essentially frozen, with a huge overhang of unsold property.

On Monday, the second largest convention of real-estate agents in the US opened in New York, with a much larger number of people registering than in recent years. Nationally, prices are still falling by about 3 per cent a year but the industry seems to reckon there will be the fundamental turning point next year. Certainly by historical standards US homes are now no longer over-valued.

There remain huge uncertainties. But unlike the European economy, the US one is not falling off a cliff. And that despite the fallout from the eurozone and the less-than-optimal approach of Congress towards cutting the fiscal deficit. For the visitor to the US, the most surprising thing is the way the economy keeps moving despite the policy gridlock in Washington DC.