The U.S. economy has seen modest but consistent growth over the last quarter, up to a 2% annual rate from a 1.3% rate in April-June. The climb is a result of increased spending by both consumers and the federal government. Still, job creation remains low.
The upcoming elections have much to do with the future of America’s economy; Republican nominee Mitt Romney is known for his attacks on President Obama’s approach to the economic crisis. Growth has indeed slowed from last year, but Obama insists that it is growing steadily.
Meanwhile, analysts have yet to express optimistic outlooks.
Paul Ashworth of Capital Economics said: “We suspect that growth will slow a little in the fourth quarter, and expect it to remain close to 2 percent next year.”
“The economy grew faster last quarter in part because consumer spending rose at a 2 percent annual rate, up from a 1.5 percent rate in the second quarter. Spending on home building and renovations increased at an annual rate of more than 14 percent.”
It adds that “federal spending surged, mainly because of the sharpest increase in defense spending in more than three years.”
No economy exists in a bubble, and America is certainly not an exception to that rule. The widening fiscal issues in Europe are threatening to have an impact on the economic recovery in America. As Ruth Stroppiana, and economist in London, said about the situation in Europe, “It’ll take years of savage spending cuts, wage cuts and welfare-pension reform to eventually grow out of the debt situation.”
American businesses, which count on Europe as a major market, will certainly feel this downturn. During January and February of 2010, U.S. companies exported $36.5 billion of products to the EU nations. Should the economy continue on its downward spiral there, it will certainly have an impact on exports and on the world economy. Read more about these issues and their impact on the American economy.
When a major company, such as General Electric Co., warns of economic hardships, it’s certainly time for the rest of the American economy to listen. In a discouraging report on Friday, GE posted a 46% drop in their fourth-quarter earnings and warned that they, and many other companies, may be in for a difficult year.
As GE’s Chief Executive Jeff Immelt told analysts on an investor conference all, “The environment in total is very tough.” The quarterly revenues slipped 5% to $46.2 billion.