Are things looking up ... or not?

Byline: PETER JAC K S O N

ACCORDING to George Soros, the billionaire financier, the US economy has hit bottom and the current quarter will see a return to growth.

He said he thought the Obama administration's pounds 477.6bn stimulus had succeeded in halting the slide in which the US economy shrank by 1% in the second quarter of this year and by 6.4% in the quarter before that, the biggest decline since 1982.

This has to be good news, not just for Americans, but also for us because the US economy is so important. After all, according to Gordon Brown, the whole thing was their fault in the first place.

Unfortunately, not everyone is as optimistic as George Soros. Take President Obama, for instance, who has said the economy is "not out of the woods" yet. Maybe the president is - as they say in PR - managing expectations, or maybe he knows something George Soros doesn't know. Certainly the pessimists seem to be supported by recent oil price movements, which have seen a fall following a drop of 1.7% in US wholesale business inventories. This decline was nearly double analysts' expectations and represented the 10th straight monthly drop, bringing inventory levels to their lowest level for more than two years.

But, just to make the picture more confusing, here in the UK the number of mortgages granted to homebuyers in June rose by nearly a quarter compared to May.

To add to this evidence for a revival in the UK housing market, both the Nationwide Building Society and the Royal Institution of Chartered Surveyors have suggested that UK house prices could be higher at the end of the year than they were at the beginning.

Sadly, coming along to rain on this particular parade is the Centre for Economics and Business Research, with a forecast that house prices will fall by a further 3% this year.

I'm not sure whether this outweighs the news from the British Retail Consortium which reports another rise in retail sales in July and a bigger increase than in June. Does that suggest recovery or ... oh, I just give up.

The truth is, we really are in a situation now where we can't really be sure whether recovery is around the corner or another fall. Toss a coin.

Peter Jackson is a writer and former business editor of The Journal - [e-mail]