A lot of economists assumed that the annualized pace of the US economy would be 0.7% but surprisingly it increased to 1%. This was possible because businesses bought more stocks than before which raised their inventories, but they would have to keep up with the trend to avoid any further complications.
They are even predicting the the growth rate to be 2.5% in March 2016. But if you look within the trend, the rate of consumer spending decreased by 0.2%. The slowdown in consumer spending can make things worse. Many economists think that the growth can be held down because of the slower growing economies pushing down the prices of raw materials and deflation.
http://www.bbc.com/news/business-35671150
This is interesting and the article points out that lower oil prices have been a drag on the profits of oil companies and a range of oil support industries, leading them to cut spending on investment. It'll be interesting to see if the prediction of 2.5% growth comes true.
ReplyDeleteIt is great to hear that the economy is experiencing growth, especially after how volatile the stock market has been recently. It will be interesting to see if increased economic growth has an influence on the presidential election regarding whether Americans will vote to keep a democrat in office or switch to a republican with a different stance on how economic matters should be handled.
ReplyDeleteMy question is whether or not the economy will continue to grow at the unexpected rate that it has been. With the increase in inventory, which should under what we discussed in class, the increase in output (Y) should be equivalent. Though will this happen? My assumption is that the answer is heavily dependent on the growth of the slower economies. Yet, as they are slower with lower cost of raw materials in addition to deflation, their output could increase therefore inching them closer to the strengthening US economy
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