Recovery Of The US Economy
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 numerous factors. Factors such as weaker construction in the commercial sector, companies’ inventory cutbacks, office software and equipment received low business investments, and construction in the commercial sector was not strong.
Even though it appears that the recovery fell short for almost everyone, it is still good to know that the economy is showing signs of growth. Since last year’s recession, there has been a continuous economic decline until this year’s third quarter and many are hoping and predicting that the current quarter will realize a higher growth percentage.
At the beginning of 2010, experts are saying that the general growth for the last quarter of 2009 will be at 4 percent. This will be reminiscent to the more than 5% growth 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 out of the woods. At 10%, the rate of unemployment may keep on rising. This would surely affect recovery and may slow next year’s economic growth to just 2%.
This year’s final quarter growth is thanked to recovering companies spending mostly on office equipments and inventory that were reduced since the credit crunch. As a consequence, factory production will go into overdrive and will contribute to the overall boost to the economy.
Other factors that would play a role in future recovery are consumer spending and increase in export sales.
One major factor that lead to last year’s economic plunge was the housing crisis where consumers fell short in paying for their mortgages. This lead not just to people losing their houses but a lot of consumers also closed their wallets in buying a house.
The auto industry also felt the burden of the recession where major car manufacturers such as General Motors incurred deficits and profit losses forcing them to downsize and ask for government bailout. These further contributed 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 helped lots of people get cash or new cars in exchange for their old cars and car dealers also benefited from it. Even though the cash for clunkers program has ended, the tax credit for homebuyers would still go on for the next year and will be a substantial help for a lot of homebuyers and the economy.
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 offer new incentive programs in order to promote consumer spending, which is considered the lifeblood of the overall US economic activity.
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