Financial markets are moving to discount the possibility that the US is pulling out of recession when they should be bracing for a long malaise in the world’s biggest economy, says Stephen Lewis at Insinger de Beaufort.

“There are several pieces of evidence that appear to support growing optimism on the US growth outlook,” he says. “Real GDP did not contract in 2008 Q1 but registered a 0.6 per cent annualised rate of expansion. Non-farm payrolls fell by only 20,000 in April. The ISM non-manufacturing survey for April reported a rise in the composite index from 49.6 to 52.0, signalling growth in the sector.”