There’s Reason to be Encouraged about the Economy

How about some good news for a change? Over the past three months, the nation’s economic output has grown at an even faster rate than most experts predicted. As a result, we are witnessing the economy’s strongest six-month performance in more than 10 years. And with the holiday shopping craziness just ahead, experts are very interested to see if this trend will continue (source).

There’s a very good possibility it could, because the Commerce Department’s recent release of its revised projections of gross domestic product showed that shoppers are increasing their willingness to purchase more. The gross domestic product report is the most comprehensive measure of goods and services available.

You have yourself to thank for the upswing. The unexpected uptick in gross domestic product, which came in at 3.9% when projections expected something closer to 3.5%, is almost entirely a direct result of consumer purchasing.

The 3.9% figure for the past three months was preceded by a 4.6% jump during the second quarter. Prior to that, the first quarter figure of a 2.1% drop was explained largely by a brutal winter that kept many would-be shoppers at home during that time period.

Why are Americans spending more? Many economists surmise that some of the rise could be due to the falling gas prices. When prices fall this significantly, it leaves more money in the pockets of the American consumer. Their willingness to spend a few more dollars here and there is the natural progression. As a result, these experts don’t believe a growth rate this significant is sustainable.

To the average economist, consumer spending is a must-watch thing. Why? Because it accounts for about 70% of all economic activity. Thus, in order for the economy to advance, Americans must persist in opening up their wallets and pocketbooks to continue powering the economic numbers.

Interestingly, while all this positivity is going on, the gross domestic product report showed the measure of consumer confidence went down in November from 94.1% to 88.7%. However, this is not consistent with other surveys, which indicate that consumer confidence is making a significant upward surge.

In addition to consumer spending, business investments are also important. There is good news in this area, too. Nonresidential investments grew by more than 7%, while investment in equipment was up by almost 11%.

Business investment goes up for two reasons. First, the investment itself, which then typically creates new jobs that come about as a result of the investment. In October, the unemployment rate was 5.8%, which is down 1.4% from the same time period last year.

Better still is this news: Not only are there more jobs, there appears to be more good jobs. Statistics show that since 2010, there have been an additional 8.2 million new jobs. Of those 8.3 million, about 95% of them are full-time opportunities.

Worldwide, the United States’ economy is one of the few headed in the right direction. The central banks in both Japan and Europe have made bold moves to lower interest rates in an effort to revive their sagging economies. Meanwhile, all the data from our country leads us to believe that the Federal Reserve may actually start moving US interest rates in the opposite direction.