There are questions over the last year growth

The growth noted at the end of last year will not probably be sustained; it will not be repeated in the near future. This was the recent report of the Commerce Department. There was noted an economic growth of 5.6% during the last quarter of 2009. The growth was less than what the government had previously estimated. But it was the strongest in the last 6 years.

The experts opine that the slowing down of the economy in the current quarter will be half the pace of the last quarter of 2009. There is little chance of the big spurt sputtering again because the main drive behind it is slowing down. The drive came from the government propping up the manufacturing sector and not because of a demand coming from the consumers. Rather this demand slowed down towards the end of December 2009 – more than what the government had apprehended. This led to the slowing down of the general economy.

The manufacturing units are producing goods but if demand does not pick up then it will be a return to square one with a stockpiling of goods.

Experts say that there will be 2.5% increase in the economy that may be 3% in the first quarter of this year. The same tendency will be mimed in the following two quarters. Usually 3% growth is considered to be alright but these are not normal times with the country pulling out from the worst recession since the time of the last Great War.

To stabilize the situation 5% growth would be required to run through the full year to push down the unemployment situation. Currently employment rate stands at 9.7% having gone down by 1%.The previous rebounds had depended on spending coming from American shoppers but this time it hinges more on business spending and spending by foreigners.

In the last quarter foreigner picked up fast goods made in USA and also availed of services. This pushed up exports – the rate being the fastest since 1996. Growth in export and spending on equipments as well as software was better than what the government had calculated in the previous month.

Consumers continued to be conservative in their spending. They stepped it up by a mere 1.6%. It was less by 2.8% in the last fourth quarter than the previous third quarter.

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