Critter Off – Deterrent

Growth And Shrink Factor On The 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. 

The slower growth movement is blamed at several factors.  Factors such as poor consumer spending, low investment on equipments and software, decline in company spending in terms of inventory and supplies, and consumers spending less than ever. 

In spite of the lower rate of growth in the economy, it is still a breath of fresh air that the economy is on its way to recovery.  This growth is the first time in almost a year of consecutive decline since the onset of the economic downturn and many are hoping and predicting that the current quarter will realize a higher rate of growth. 

At the beginning of 2010, experts are saying that the overall growth for the last quarter of 2009 will be at 4 percent.  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 still has a long way to go before it can be out of the woods.  It is thought that the unemployment rate, which is presently at 10%, may go on rising.  Economic growth could just be limited between 2-3 percent if this rate is not lowered.

The October to December growth for this year is thanked to the replenishment of inventories from different companies also in recovery that were reduced since the credit crunch.  Thanks to such improvement, factory production will go into overdrive and will be a contributing factor to economic growth.

Other factors that would play a role in future recovery are consumer spending and increase in export sales. 

Much of the cause 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 major car manufacturers such as General Motors suffered enormous 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. 

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 individuals get cash or new cars by swapping their old cars and car dealers also benefited from it.  Although the cash for clunkers program ended in August, the tax credit for homebuyers is still in effect and will be a big support for a lot of homebuyers and the economy.

There are still uncertainties whether the economy could keep up 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 promote consumer spending, which is considered the lifeblood of the overall US economic activity.