This paper examines the expected growth of the United State’s GDP. It looks at how the economy is performing, especially after the recent credit crunch that had effects on the whole world’s economy. The paper looks at GDP growth rates expected at different rates for specific periods of time. According to the World Bank, the economy of the United States of America is the largest amongst the world’s economies.
Expected U.S. GDP growth rate going forward
Economic growth is a situation in which the value of goods and services produced by a given economy. It is measured in terms of GDP where it is taken as the percentage rate of rise in real GDP. Growth is an economic parameter that is presented in real terms; this means that it varies according to adjustments in inflation-terms so that the effects of inflation on product prices can be netted out (Lipsey, et al, 2007). The average living standards of citizens of a nation are measured using real GDP per capita calculated as the total GDP divided by the total population in an economy.
Considering the recent economic activities, the economy was on a go slow during the second quarter due to the fact that consumer spending was adversely affected by job scarcity. This condition left the recovery to almost solely dependent on the flow in commercial investments.
According to updates of July 28, 2010 by Economic Outlook Index, it predicted that the economy will experience growth in real Gross Domestic Product at an annualized growth rate based on six month period. However, after the end of stimulus initiatives, it is expected to slow to about 2.5% by the end of December 2010. This situation will be greatly influenced by the seemingly perpetual high unemployment, the feeble housing market, high debt and rigid credit.
The GDP of U.S., and of course other economies, can be determined either by finding total demand in the economy, total production or total spending. Using total spending, it is projected that during 2010 the total spending will be $6413 billion. This represents about $378 billion or 6.26% increase based on the previous projections of 2009. This is also expected to continue rising in the subsequent years. For instance, the total spending is expected to hit $6713 billion and $6832 billion in 2011 and 2012 respectively (U.S.A. Government spending, 2010).
The implication of this is that the U.S. GDP can be expected to grow at the rate 6.26% in 2010, 4.68% in 2011; this represents a drop from the preceding period and in 2012 it is expected to grow at the rate of 1.77% (U.S.A. Government spending, 2010).
This means that even though the real GDP is expected to grow between 2010 and 2010, it will happen at a reducing rate. Even, So, some of drivers of the projected growth include the expected increase in employment for the period running from 2008 to 2018 in which unemployment is to reduce by 10.1% and increased government expenditures amongst other significant economic factors. It is therefore important to note that there is no cause for alarm amongst the business community and the investors.
The recent credit crunch which started in 2007 affected the U.S.A economy alongside other major world economies hence sending ripple effects to the developing economies (International Monetary Fund, 2008). More jobs were lost during the period, the prices in the real estate market experienced high inflations and generally the cost of basic consumer products went up. However, through stimulus strategy and other economic interventions has seen the U.S GDP growth start increasing. This is due to projected growth in total expenditures and commercial activities within the U.S. economy. It is also expected that unemployment rate will go down and hence have a positive effects on total expenditures.