Nancy Smith: A retrospective glance at the US economy – Will it pick up pace?

MontyHigh: World Of Wallstreet welcomes a new author, Nancy Smith.

How has the year 2011 been for the US economy? Was it a satisfactory one or below the average? Well, if you’ve had a nodding acquaintance with the recent financial events throughout the US, you must be unanimously acknowledging with all the other financial experts that 2011 had been a disastrous year for the nation’s economy and all the events have gradually eroded the confidence of the debtors as a large number of them had to rush to debt consolidation firms to eliminate their debt burden. Apart from the Greek and the sovereign debt crisis having an adverse impact on the economy of the US, there are some other factors too that led to a severe and shocking financial crisis within the economy. Here are some events that are worth mentioning.

• Rising of the debt ceiling: When the US economy was drowning in a sea of federal debt and couldn’t repay the amount, there were constant debates of the raising of the federal debt ceiling so that the nation could start borrowing once again and stop incurring debts. However, there were too many controversies regarding the debt ceiling and in spite of all the controversies, the final decision were to raise the ceiling so that the nation could get back a firm grip on their financial state. The Republicans and Obama both took this decision so that they could revive the US economy.

• Credit downgrade by the S&P: Another financial event that scared the investors and the debtors was the credit downgrade by the S&P. For the first time in the history of the US, it lost the pristine credit rating (AAA) and that was cut off by one notch to AA+. This was a drastic decision by the credit rating agency and the investors went through a tough financial time as they were at a risky position when they couldn’t calculate the exact losses that they could face with their financial assets. The experts predicted that the interest rates on the personal loans and the mortgage loans would increase and therefore the debtors would be at a loss. But despite the predictions, the mortgage rates behaved abnormally and went through record low levels.

The above 2 events holds utmost importance in 2011 as the entire world economy and its measures revolved around them. Now that the top-notch credit rating has been reduced and the debt ceiling has been raised, the new worries are of the US economy sleepwalking into yet another financial fiasco. However, how much is this true? Read on.

Can the US economy avert a stall and pick up pace?

Research reveals that the economic growth in the US picked up pace in the last quarter of 2011 and has also shown signs of recovery, though staggeringly slow. Analysts have found out that the consumers spent more on health care and utilities and the business firms have invested more on software programs and vehicles. The total output of nation’s goods grew at an annual rate of 2.5% since July and almost doubled the rate of the previous quarter. Though all the aforementioned improvements are not at all brisk but they do dispel the fears of the economy backsliding into yet another recession. Investors are again happy with their investment decisions and a broad agreement has been stuck with Europe to curb the debt crisis.

Comments

[Felix]

I think the US economy handled this year quite well despite the issues you mentioned and also that terrible tsunami in Japan that put a major damper on the recovery. I believe we will continue to see growth accelerate.

[sarah mono]

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