Recovery Of The US Economy
The US economy showed signs of recovery in this year’s third quarter where 2.2 percent growth rate was met but failed to meet the 2.8 percent expectation.
A number of factors are blamed for the slower pace. Factors such as weaker construction in the commercial sector, low investment on equipments and software, decline in company spending in terms of inventory and supplies, and construction in the commercial sector was not strong.
Even though it seems that the recovery fell short for almost everyone, it is still a sign of hope for a lot of Americans that the economy is on its way to recovery. Since last year’s recession, there has been a continuous economic decline until this year’s third quarter and a lot of experts have their hopes up that the last quarter will realize a higher percentage growth rate.
Before the year ends, economists believe that a possible growth of 4% will be reached in the fourth quarter. This will mirror the economic growth of 5.4% in the first three months back in 2006.
Even if the economy grows for the time being, the country’s economy has still a long way to go before it can be returned to its previous shape. At 10%, the rate of unemployment may go on rising. This may cause economic growth in the US to drastically slow down to just 2-3 percent.
The October to December growth for this year is thanked to different companies resupplying their inventories that were reduced since the credit crunch. As a consequence, manufacturers will double their production and will be a contributing factor to economic growth.
Other factors that would play a role in future recovery are consumer spending and soar in export sales.
One major factor that lead to last year’s economic slump was the housing crisis where mortgages kept piling up until fiscally troubled homeowners were no longer able to sustain them. This lead to homeowners not just losing their homes but a lot of consumers also closed their wallets in buying a house.
The recession also affected the auto industry where chief car manufacturers such as General Motors incurred deficits and profit losses forcing them to downsize and ask for government bailout. These contributed further to the decline in the country’s economy.
First-time homebuyers were offered a $8,000 tax credit so that home-sales stayed floating and the cash for clunkers program benefited both consumers and car dealers. Although the cash for clunkers program ended in August, the tax credit for homebuyers is still in effect and will be an encouragement for homebuyers and the housing market.
There are still doubts whether the economy could retain its level of recovery for the next 2-3 years. Economists say that the government needs to present new stimulus programs in order to promote consumer spending, which is considered the means of support of the overall US economic activity.
