In the first quarter of 2016 the US economy has grown really slow. It has just managed a 0.5% of growth in the first quarter of 2016.
This slow growth is often attributed to decreased consumer spending. The strong value of the Dollar and lagging exports coupled with a serious decline in business investments.
Now this is not a phenomenon secluded to this quarter alone, the rate of US GDP have gone on declining for the past four quarters, sparking confusion and questions whether a fresh wave of recession would hit the economy.
The short run causes of slow growth are undoubtedly decreased consumer spending. As is common knowledge, consumer spending forms the largest portion of the GDP pie and contributes about two-thirds of US GDP. One of the factors could be declining auto sales which formed a large part of consumer spending.
The long run causes are mainly two:
- The strong dollar and the stagnant global growth rates. The strong value of the dollar prevents US exports from reaching the potential in the universal market.
- Secondly, the declining business investments have aggravated the situation.
So is a recession imminent? According to Outsource Market Research India, although it’s too soon to say whether the business cycle would be hit with another recession, however experts have found certain ‘anomalies’ and certain disturbing trends which do suggest that the falling consumer spending and the declining business investment is a reason for concern.
In such a situation, it becomes extremely important for an industry to Outsource business research India in order to obtain qualitative as well as quantitative estimations of a particular target market, the competitors and the targeted customer base.
As for the policy undertaken by the Federal Reserve, it is one of normalization of interest rates, but all such steps are being carried out in an extremely cautious and pre-meditated manner. The long term goals adopted by The Fed could be a major part of the economic policy to correct the imbalance in the business cycle.