US Economy Recovering–But Not As Much As The Forecast
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 a number of factors. These factors include consumers spending less than ever, companies’ inventory cutbacks, decline in company spending in terms of inventory and supplies, and construction in the commercial sector was not strong.
Even with the decelerated growth pace, it is still good to know that the economy is showing signs of growth. Following months of decline, it was only from July-September 2009 where growth in the economy come about and many are hoping and predicting that the current quarter will have a higher growth percentage.
At the beginning of 2010, experts are saying that the overall growth for the last quarter of 2009 will be at 4 percent. This will recall the more than 5% growth in the first quarter of 2006.
Even though the economy is growing, the US economy has still a long way to go before it can see a significant progress on the whole economy. It is said that the unemployment rate, which is now at 10%, may keep on rising. This would surely influence recovery and may slow down next year’s economic growth to just 2%.
The October to December growth for this year is thanked to the restocking of inventories from different companies also in recovery that were reduced since the credit crunch. Thanks to such improvement, manufacturers will double their production and will be a factor for economic recovery.
Other factors that would play a role in future recovery are consumer spending and increase in export sales.
Much of the cause behind last year’s recession was the crisis in the housing sector, where consumers fell short in paying for their mortgages. This resulted hundreds losing their homes and a lot of people needed to tighten their resources in which buying a home is no longer an alternative.
The auto industry also felt the brunt of the recession where major car manufacturers such as General Motors suffered colossal plummet in sales forcing them to lay-off thousands of workers and ask for 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 afloat and the cash for clunkers program has also provided lots of car dealers new ways to sustain their sales revenue. Even though the cash for clunkers program ended in August, the tax credit for homebuyers is still in effect and will be a big aid for a lot of homebuyers and the economy.
There are still skepticisms whether the economy could maintain its level of recovery for the next 2-3 years. Economists say that the government needs to present more stimulus programs in order to for consumer expenditure to be on the move once more, which is considered the means of support of the overall US economic activity.