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.
Despite the fact that the 2.2% recovery is seen as a blessing, there are still few factors being blamed for the slow rate of growth. 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.
Even though it looks as if that the recovery fell short for almost everybody, 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 nonstop economic decline until this year’s third quarter and a lot of experts have their hopes up that the current quarter will have a higher growth percentage.
Analysts say that there would probably be a 4% growth in the economy at the end of 2009. This will mirror the economic growth of 5.4% in January to March back in 2006.
Even though the economy is growing, the country’s economy 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 indeed have an impact on the recovery and may slow next year’s economic growth to just 2%.
The October to December growth for this year is thanked to different companies resupplying their inventories that were reduced since the credit crunch. Thanks to such improvement, factory production will go into overdrive and will play a part to the overall boost to the economy.
A rise in export sale and rise in consumer and business spending are also expected to provide a hand on the last quarter growth.
The recession of 2008 was caused in part by the crisis in the housing industry where homeowners became incapable of paying their mortgage. This lead hundreds losing their homes and a lot of consumers needed to tighten their resources wherein buying a house is no longer an option.
Car industries have also been knocked hard where major car manufacturers such as General Motors suffered colossal plummet in sales 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 afloat and the cash for clunkers program has also provided plenty of car dealers new ways to sustain their sales income. Even though 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 skepticisms whether the economy could keep up its level of recovery for the next 2-3 years. Economists say that the government needs to offer additional incentive programs in order to encourage consumer spending, which is considered the lifeblood of the overall US economic activity.