US and Europe

September 2012 GDP numbers show US still stuck in second gear

Wednesday October 31, 2012 Hugh Dixon

The United States of America’s (US) Bureau of Economic Analysis has released data on the US GDP for the September 2012 quarter.

Between the June and September 2012 quarters, America’s GDP increased by 0.5 percent, up from a 0.3 percent increase in the June 2012 quarter. This quarterly increase came mainly from a 0.5 percent increase in personal consumption expenditure, and a 0.9 percent increase in federal government spending.

While the GDP numbers for September 2012 are an improvement from the June 2012 quarter, the US economy is still struggling to continuously grow over several quarters or even a year. Over the last year, annual GDP growth in the US has fluctuated between 2 and 2.4 percent, as a good growth quarter is followed by a bad growth quarter. If this pattern continues, and December 2012 quarter sees a reduction in GDP growth, the US will see annual GDP growth once again fall below 2 percent.

 

 

Annually, the American economy has grown by 2.3 percent this is an increase on the 2.1 percent per annum growth seen in the year to June 2012. This increase in annual GDP growth for the year to September 2012 has come mainly from a 2 percent growth in personal consumption expenditure and a 9.5 percent growth in private investment, in the year to September 2012.

The growth in personal consumption expenditure is a positive sign that American consumers are starting to feel secure enough in their employment and with their debt levels to increase spending on goods and services, which will help drive the economy faster.

The challenge for the United States of America, if they wish to shake off the lingering effects of the global financial crisis, is to consistently improve their economy’s growth rate for several quarters in a row. This will drive their annual GDP growth rate much closer to 3 percent per annum, or preferably past 3 percent.