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Expectations of Current Economy Essay

The U. S. economy in 2013 has a projected growth increased to an annual rate of 2. 5 percent in the first quarter, but not enough to meet the expectations made by the economists (Aljazeera 2013). The reason why all of these projections came to be was because of disappointments that came about; plans did not follow through, or because of accident and uncontrollable events. For example, part of the acceleration in activity reflected farmers filling up silos after a drought in the summer decimated their crops output, but the growth rate was a halfhearted 1. percent (Aljazeera 2013).

Because of this event that transpired, the economy did need to compensate in other areas for this event not to be an overall bust. To help with the compensation would be all the other fields of the economy such as the spending of the consumer. The consumer spending, accounting for more than two-thirds of US economic activity, increased at a 3. 2 percent. It grew at a 1. 8 percent rate in the fourth quarter of last year (Aljazeera 2013). However consumer spending was not enough to compensate for other downfalls.

Households cut back on saving to fund their purchases after their incomes dropped at a 5. 3 percent rate in the first quarter (Aljazeera 2013). The saving rate fell to 2. 6 percent from 4. 7 percent in the fourth quarter of 2012(Aljazeera 2013). But now, based on projections, housing is showing positive signs and can be expected to keep improving over the next year The spending of the government fell to a 4. 1 percent annual rate and most of the increase in the first-quarter spending came from car purchases and outlays for utilities (Aljazeera 2013).

But with this good news, the purchase of equipment and software by businesses slowed sharply. But it picked back up at only three percent rate after a brisk 11. 8 percent pace in the fourth quarter (Aljazeera 2013). The forces needed for a quickening US recovery are already in place, but they are going to occur slowly but surely. The balances of items that are or could be affecting the US consumer spending have turned positive (IHS 2012). Also seen is that US businesses are likely to spend and hire more, which means that growth will average around 2% next year (HIS 2012).


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