Interesting Economic Trends May Indicate Slowing Economy
Although in some ways things were looking up for the American economy at the start of 2016, with low unemployment rates of 5% and gas prices also consumer-friendly, an inexplicable trend of low consumer spending has had economists concerned. A number of factors showing very mixed predictors of the economic future of the country. Through this information, it’s clear that policy makers will have an important role to play in the coming months.
Now that we’ve reached the third month of the year, consumer spending has increased, although very slightly. Some economists see this as the sign that the economy although not booming, is strong and plugging away. Consumers have been slower to return to spending as they’re still recovering from losses, and choosing to play it safe by saving more. This seems to indicate that consumers are now slowly making their way back to the cash register. Despite this more cheery news, the most recent analysis by economists is mixed.
Many economists see the world environment as a troubling one. With the strong dollar and suffering worldwide economies, exports aren’t being sold. Another sign that the economy is at the best slow and at worst likely to experience a recession is the freight and truck transport numbers. These figures show the pulse of the economy by giving an indicator of the level of economic activity. Declining levels of freight and truck transports have been associated with recessions. This news is accompanied by other reports that manufacturing has stalled due to low demands for highly priced American made goods overseas. This is due to the strong dollar. Finally, some of the biggest and strongest companies in the country are making less money. Profits are down for companies such as Apple, who claims that their sales for iPhones are declining for the first time in 13 years.
A clear analysis of all of these factors hasn’t been made by economists, however it seems clear that policy makers have an important role to play. The recent stimulus package in 2010 hasn’t had as much of an effect on the economy as would be hoped and government spending is now lower than when the recession began. The government action, particularly of the Federal Reserve, is a key factor for emerging from the recession. While no one can tell the future, careful policies could help turn things in a more positive direction.
References
- Statista. (2015). Employment rate in the United States from 1990 to 2014. [online] Available at: http://www.statista.com/statistics/192398/employment-rate-in-the-us-since-1990
- Buttonwood. Feb, 2016. The Trucks and Trains Test; Barely Rolling Along. The Economist. Available at: http://www.economist.com/blogs/buttonwood/2016/02/american-economy
- Gillepsie, Patrick. Feb 1, 2016. Will America’s economy get dragged into recession? CNN Money. Available at: http://money.cnn.com/2016/02/01/news/economy/american-economy-manufacturing-consumer-recession/
- Helmore, Edward. US economic slowdown may be less severe than previously thought The Guardian. Available at: http://www.theguardian.com/business/2016/feb/26/us-economy-slowdown-gdp-less-severe-than-previously-thought
- Gillepsie, Patrick. January 29, 2016. Cracks in America’s economy are growing. CNN Money. Available at: http://money.cnn.com/2016/01/28/news/economy/cracks-in-the-us-economy/
- Torry, H. Feb 26, 2016. US Economy Starting 2016 On Solid Footing. Wall Street Journal. Available at: http://www.wsj.com/articles/u-s-growth-revised-higher-in-fourth-quarter-1456493673