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An economy's growth and development can be described as both qualitative and quantitative improvements in that economy. Main economic metrics and components are evaluated to determine whether the economy is improving or deteriorating. That includes variables such as unemployment or labor force participation rates, the rate of change in GDP, the change in the Consumer Price Index, and increases in consumer credit.
The US economy saw an annual change in actual Gross Domestic Product of around +1.8 percent. The positive increase of Consumer Credit signifies an economy with low-interest rates hence higher participation by all members of society. The increase in jobs by about 291,000 means that there is increased participation in the wage earning jobs hence less dependency on the economy. These parameters and their positive changes are a testament to an economy that is experiencing both the needed qualitative and quantitative changes.
Key words: economy, consumer, growth
The changes in the main economic indicators such as the rate of unemployment over the last one year reveal a that the United States economy is robust and promising. From the economic analysis, such as the annual rate of change of the GDP it is safe to forecast that in the near future, the United States economy will register a steady growth at a pace faster than its global competitors.
October witnessed an increase of 261,000 in gross non- farm employment. However, there was a fall in employment in the food and beverages industries because of natural disasters such as Hurricanes Irma and Harvey. Professional and business activities registered the highest increases while some other undertakings such as mining witnessed little or no change. As a matter of fact, there was an estimated creation of 50,000 jobs for professionals in October. However, there is a high number of people- about 24.8% of the population, that is still not in employment. In addition, the labor force participation rate has little movement with a decline reported in October to 60.2% from 60.4% in September and 60.1% in August. According to The Economic Report of the President (2017), there was an average of jobs gained of about 162,000, in total, during the duration of the last three months. This is in support of the growth of the economy because of the number of people dependent on the economy is going down. In addition, the higher the rate of employment, the higher the per capita income hence economic development takes place. Going by these statistics, it is safe to predict a lower unemployment rate in the future-standing as approximately at about 6% of the population by the year 2020.
The Consumer Price Index is an analysis of the spending habits of urban consumers and their counterpart wage earners. It is therefore a measure of the changes of prices that customers are willing to pay in exchange for goods and services. According to the U.S Department of Labor (2017,) there was a rise in the all items index by 2.0% over the last year. Food and energy specifically had a rise of 6.4 and 1.3 percentages respectively. Apparel items had the least rise with -6% increase. This shows a positive direction because it is an illustration of an increasing purchasing power by the consumers. The disposable income of the consumers is at a place where they can afford to spend more in exchange of more goods and services. The future CPI performance can be estimated to be at 268 index points in 2020. The downside of this is increased inflation if not kept in check.
There was an increase in consumer credit of about 5.5% during the last third quarter. This increase can be attributed to low interest rates hence many people were able to access loans and credit. This is a positive indicator of the fact that many people are now able to participate in the economy. The downside of this would be an increase in inflation if there is an excess circulation of money in the economy if there is an over participation. According to the U.S Department of Commerce-Bureau of Economic Analysis (2017), there was an increase in the real GDP of the economy at an annual rate of 1.8% in 2016. This can be attributed to a stronger dollar that favors the exports of the country. It is therefore safe to estimate that the economy will reach its full potential by 2020. This will be achieved if the real GDP increases will go up to 2.5%.
According to The Conference Board (2017), there was a change in leading economic index and related composite indexes. For instance, the Leading Economic Index witnessed a massive increase of about 2.9% in October. This is on average about 5.9% of its annual growth rate. The Coincident Economic Index also registered a rise of about 1%, translating to an annual rate of 1.9%. This pace of growth can be largely attributed to positive influences from all the fundamental mechanisms of the Leading Economic Index. According to the Census Bureau (2017), retail in volume of trade sales rose by 0.2% from September. During the last twelve months, the sales has risen by 4.7%. This is a great indicator that the economy is conducive to carry out businesses and investments have a sure guarantee to yield positive results. This cannot happen in an economy where there is little or no growth.
In conclusion, the United States economy is as promising and robust as ever. An increase of over 1.8% in GDP, a rise of 261,000 jobs as well as an annual growth rate of the Leading economic indexes of about 5.9% are just but the major significant facts that demonstrate that this economy is headed for better days. What needs to be done is to control the inflation rate by keeping the flow of money and price changes in the economy in check.
The Census Bureau. (2017). Retail Sales Report. Advance Monthly Retail Trade Report. Retrieved from https://www.census.gov/retail/index.html
The Conference Board. (2017). Leading Economic Index. Technical Notes. Retrieved from https://www.conference-board.html
The Economic Report of the President. (2017). Economic Report. 2017 Economic Report of the President. Retrieved from https://www.obamawhitehouse.archives.gov/admnistration/eop/cea
The U.S Department of Commerce. –Bureau of Economic Analysis (2017). Gross Domestic Product. News Release: Gross Domestic Product. Retrieved from https://www.bea.gov/index.html
The U.S Department of Labor. (2017). Consumer Price Index. Consumer Price Index: October 2017. Retrieved from https://www.bls.gov/cpi/
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