The US economy showed signs of recovery in this year’s third quarter where 2.2 percent growth rate was met but was unsuccessful to come across the 2.8 percent expectation.
The slower growth movement is blamed at several factors. Factors such as weaker construction in the commercial sector, companies’ inventory cutbacks, office software and equipment received low business investments, and a commercial sector’s weak construction activity.
Despite the slow growth speed, it is still good to know that the economy is becoming more favorable after months of going downhill. Following months of decline, it was only from July-September 2009 where growth in the economy occurred and many are hoping and predicting that the last quarter will realize a higher growth percentage.
Before the year ends, economists think that a possible growth of 4% will be achieved in the fourth quarter. 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 a long way to go before it can be restored to its previous state. At 10%, the rate of unemployment may keep on rising. This would surely affect recovery and may slow down next year’s economic growth to just 2%.
The growth in this year’s last quarter is thanked to recovering companies spending mainly on office supplies and inventory that was dramatically depleted during and after the economic slump. Because of this, it will encourage the manufacturing industry to yield more commodities 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.
Much of the source behind last year’s recession was the crisis in the housing sector, where mortgages kept piling up until financially troubled homeowners were no longer able to sustain them. This resulted hundreds losing their homes and a lot of consumers also closed their wallets in buying a house.
Car industries have also been struck hard where chief car manufacturers such as General Motors incurred deficits and profit losses 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 presented 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. Although the cash for clunkers program ended in August, 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 skepticisms whether the economy could retain its level of recovery for the next 2-3 years. Economists say that the government needs to put forward additional 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.