In the third quarter of 2009, there was a 2.2% growth in the US economy, much lesser than the 2.8% GDP recovery forecast.
The slower growth movement is blamed at several causes. These factors include weaker construction in the commercial sector, low investment on equipments and software, office software and equipment received low business [...]
Written by 1wayl on December 27th, 2009 with
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In the third quarter of 2009, there was a 2.2% growth in the US economy, much lesser than the 2.8% GDP recovery forecast.
The slower growth movement is blamed at several causes. These factors include weaker construction in the commercial sector, low investment on equipments and software, office software and equipment received low business investments, and a commercial sector’s weak construction activity.
In spite of the lower rate of growth in the economy, it is still a sign of hope for a lot of Americans that the economy is becoming more favorable after months of going downhill. This growth is the first time in almost a year of consecutive decline since the onset of the recession and many economists predict that the last quarter will realize a higher growth percentage.
Before the year ends, economists think that a likely growth of 4% will be reached in the fourth quarter. This will mirror the economic growth of 5.4% in the first quarter of 2006.
In spite of all this growth, the economy in the US has still to overcome existing challenges before it can be returned to its previous state. The present unemployment rate is at 10% and may continue to rise. This may affect economic growth in the US to drastically slow down to just 2-3 percent.
The growth in this year’s last quarter is credited to the reloading of inventories from different companies also in recovery that was dramatically used up during and after the economic downturn. Because of this, it will encourage the manufacturing industry to churn out more goods and will play a part to the overall boost to the economy.
An increase in business and consumer spending as well as rising export will also boost the economy in the long run.
The recession of 2008 was caused to some extent by the crisis in the housing industry 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 had to spend less on practically everything including buying a home.
The recession also affected the auto industry where major car manufacturers such as General Motors incurred huge debts and profit losses forcing them to lay-off thousands of workers and appeal to government bailout. These contributed further to the decline in the country’s economy.
Thanks to the $8,000 tax credit offered by the government to first-time home buyers, home-sales stayed floating and the cash for clunkers program benefited both consumers and car dealers. Although the cash for clunkers program has ended, the tax credit for homebuyers is still in effect and will be an encouragement for homebuyers and the housing market.
There are still uncertainties whether the economy could continue its level of recovery for the next 2-3 years. Economists say that the government needs to present additional incentive programs in order to boost the spending of consumers, which is considered the lifeblood of the overall US economic activity.
Written by 1wayl on December 27th, 2009 with
comments disabled.
Read more articles on Uncategorized.
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