The growth of the U.S. economy improved at a slower rate in the summer than what was expected. This was because consumers spent less than the estimations done by the government during the season. However, economists said that they are anticipating a faster growth rate between the months of October and December, the last quarter of the year.
According to the report of the U.S. Department of Commerce, the country’s economy gained an annual rate of 1.8 percent during the July-September quarter. As compared with the annual rate of 1.3 percent in the April-June quarter and with the remaining quarters of the year, the recent recorded annual rate was the fastest growth year in 2011.
According to the government’s report the annual rate last summer only grew by 1.7 percent, a bit lower than the 2.3 percent growth that it previously estimated. The government said that the lower percent growth is due to the less spending of people in hospitals.
Economists perceived that the country’s economy will further grow in the remaining three months of the year with an annual rate of higher than 3 percent. If this would materialize, this annual rate would be the speediest rate since the tsunami incident in Japan last spring of 2010.
Some of the trends that are responsible for the continuous improvement of the country’s economy are the fall of unemployment rate, booming factory productions, strong holiday shopping and the decrease of gas prices.
Even though the unemployment rate had already dropped to 8.6 percent in November, the lowest since March 2009, economists believe that stronger growth is still necessary in order to remarkably lower the level of unemployment in the country.
There are also some factors that threaten the strengthening economy of the country. One of these factors is Europe’s probable recession. 17 countries in the region that use Euro as their money currency are having a hard time to compensate their individual debts. They are also having huge problems in maintaining their currency union bonded. A number of economists are now expressing worries on the possibility that Europe may plunge into a period of recession once again. If this would be the case, U.S. companies that are exporting to the region may be greatly affected.
Another thing that may bring problems to the improving economy is the decision of the Congress regarding the extension of the Social Security payroll tax cut. If the body decided not to continue the tax cut and extended benefits, their action could retard the economic growth by as much as 1 percent next year. However, if the tax cut and extended benefits will be renewed, the economy will experience an increase of 2.6 percent, according to Mark Zandi, chief economist at Moodys Analytics.