Why Jim O'Neill Is Suddenly Worried About The US Economy

goldman jim o'neillJim O’Neill

Photo: BBC

Jim O’Neill, Chairman of Goldman Sachs Asset Management, has been a long time bull on the U.S. economy.He recently told Bloomberg television that he thought it was the most important growth driver in the world.

In his 11 Predictions for 2012, he was banking on the possibility that economic data would continue to surprise.  That call had been true for a while, but then things turned in recent weeks.

And finally, one data point last week finally got him worried.

In his latest Viewpoint note:

I find myself wavering a little about the US recovery story. While for now, I’m happy to stick with our above consensus 2.5 pct real GDP forecast for 2012, and I buy into the housing sector recovery and shale gas themes, as I have frequently argued, weekly job claims are not to be ignored. While hoping last week’s would decline again, thereby rendering the March payroll disappointment as “susceptible,” in fact, it rose to 380,000, providing support to those who argue the apparent economic strength of the Winter was artificially helped by the weather.

All of the jobs numbers have been improving as of late.  But of course, everyone is worried if it has been just about the unusually warm weather, rather than improvements in the underlying economy.

O’Neill notes that the read on this week’s initial jobless claims number will be “extremely important.”

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