Recovery Of The US Economy

In the third quarter of 2009, there was a 2.2% growth in the US economy, much smaller than the 2.8% GDP recovery forecast. 

While the 2.2% recovery is seen as a blessing, there are still few factors being blamed for the slow rate of growth.  Factors such as people not spending much, 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 seems that the recovery fell short for almost everyone, it is still good to know that the economy is on its way to recovery.  After months of decline, it was only from July-September 2009 where growth in the economy come about and a lot of experts have their hopes up that the current quarter will realize a higher growth percentage. 

Analysts say that there would almost certainly be a 4% growth in the economy at the end of 2009.  This will be reminiscent to the more than 5% growth in the first three months back in 2006. 

Even though the economy is growing, the economy in the US has still to overcome existing challenges before it can be out of the woods.  It is thought that the unemployment rate, which is currently at 10%, may keep on rising.  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 thanked to different companies resupplying their inventories that was dramatically exhausted during and after the economic recession.  As a result, it will encourage the manufacturing industry to churn out more commodities and will contribute to the overall boost to the economy.

A rise in export sale and rise in consumer and corporate spending are also likely 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 resulted not just to people losing their houses but a lot of people needed to tighten their resources in which buying a home is no longer an alternative. 

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 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 buoyant and the cash for clunkers program benefited both consumers and car dealers.  Even though the cash for clunkers program has ended, the tax credit for homebuyers is still in effect and is expected to play a role in the continued economic recovery.

There are still doubts whether the economy could continue its level of recovery for the next 2-3 years.  Economists say that the government needs to put forward more incentive programs in order to for consumer spending to be on the move once more, which is considered the lifeblood of the overall US economic activity.