Consumers are likely to play a smaller role in the recovery to the recession than they did following the 2001 recession. Although consumer spending makes up two-thirds of the nation's economic activity, there is still hope that the economy will bounce back without as much help from consumers. Economists estimate a 2% increase in disposable income and consumer spending this year, and expect economic growth of about 3%.
So what, then, will put an end to this recession?
It is argued that business investment and exports will play a key role in boosting the economy. The U.S. is still a significant exporter, with $1.4 trillion worth of goods and services in 2009. Exports now make up 25-30% of U.S. manufacturing shipments and growing twice as fast as the global average. This growth in exports will lead to more jobs and consumer spending in the U.S.
i think this article is pretty accurate when it says that consumers will play a smaller role than usual in this recovery. in order for consumers to even help the government needs to find a way to raise consumer confidence. in some ways they have already done this by lowering interest rates to historic lows. however i feel that to strengthen our economy the government first needs to put in policies that will prevent this crisis from getting worse or happening again.
ReplyDeleteI actually got pretty excited when I read the article and saw that we were exporting more than usual. I even thought about a possibility of having a trade surplus; but according to the Bureau of Economic Analysis in 2008 the US has imported $2.5 trillion. With consumers playing a smaller role that means less imports as well. We will just have to wait for the annual report for 2009.
ReplyDeleteThis article addresses the very question I've had on my mind the past few weeks. I think it's good news (especially for consumers) that they will not have to bear the burden of supporting the US economic recovery. This will kind of take the pressure of them in terms of spending and hopefully encourage them to return to normalcy.
ReplyDeleteBefore I saw this article, I thought it was “who needs consumer spending?
ReplyDeleteHowever, I found I was wrong. It seems that this is an article, which is full of confidence of America’s economic resilience. I really appreciate this confidence. However, as mentioned in the article, consumer’s consumption makes up roughly two-third of the revenue of America’s economy. Additionally, although exports revenue of the US is a considerable number, yet it still cannot offset the expenditures of imports. Therefore, in my opinion, consumer’s expenditure cannot be ignored when make strategies related to America’s recovery plan as mentioned in this article.