Several reports provide an indication that the US economy has been improving significantly since January 2014, providing hope to the millions of people and companies that have been affected by slowed growth rates since the end of the recession. In this article published in the New York Times, Cohen reports that the third quarter of the 2014 fiscal year has provided the latest evidence that the economy is growing rapidly, despite criticism from some skeptics.
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The article focuses on the real Gross Domestic Product of the US, citing empirical evidences that the economy is improving at a faster rate than expected. According to the author, GDP is the measure of all goods and services produced in the country at the specified period. October was shown to be the strongest of the six months in which the national GDP has been growing, with an estimated growth of about 3.5%. In this case, the authors note that the increase in America’s GDP in the third quarter of 2014 was primary is driven by gains across various sectors, a favorable trade balance, and a burst in the nation’s military spending.
In addition, the article states that a number of other factors played a significant role in improving the real GDP. For instance, consumer confidence increased while the weekly reports on unemployment indicated that the rate of unemployment was decreasing significantly. In addition, the price of bonds moved upwards as indicated by the Standard & Poor 500-stock index that recorded an increase of 0.6% and the Dow Jones industrial average that increased by more than 220 points.
Statistically, the article shows that the national economy performed excellently between July and September, recoding an annualized growth rate of about 4.6%. This growth is an improvement from the previous 2.1% decrease recorded between January and March.
Moreover, the article states that most statistical and economic forecasts show that the economy will grow at a relatively similar rate in the coming months. It is expected that the annual growth rate will exceed 3% at the end of the year and increase in 2015. However, the article further states that the results are preliminary and the government is expected to revise the figures at the end of the months of November and December.
Despite these achievements, Cohen states that skeptics have revealed the negative side of the national economy. For instance, they point to the consumer spending that was relatively weaker than expected, recording an increase of 1.8% only. In addition, lower and middle-income families failed to spend the money that had saved from the falling prices of gases.
Personal analysis and opinions
The increasing GDP is a good indicator that the national economy is improving. In fact, at 3%, the economy is growing at a faster rate than most developed nations as well as middle-income nations. Most European nations, Japan and China have recorded growth rates of less than 3%, which means that the US is improving her economy.
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When compared to 2013, the 2014 fiscal year seems promising as shown in figure 2 below
The above graphs show that the United States is in the right path towards economic development, especially due to the indication of recovering from the 2007-2010 recession.
Nevertheless, I do not think the real GDP provides satisfactory measure of the economic growth because it fails to account for the level of debt the US has. In addition, it takes short-term measures such as quarterly data shown above, which means that it fails to consider the cost that the country pays to meet its debts per annum.