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Is the US Economy Picking Up?

By Sera Akinci  |  31/07/2017 11:17
In Friday’s data release, the US economy proved itself by picking up the pace in the 2nd quarter. The economy grew at a 2.6% annual rate in the 2nd quarter, a rebound following 1.2% growth in the previous quarter.

It seems like the US economy grew by about 2% in the 1st half of the year, which more or less matches its growth rate in the past 8 years. The growth rate is currently slow, but steady.
According to another study, US businesses are spending more on investing for the future. This means that businesses are investing in new factories, equipment and other major spends. These types of investments boost businesses’ productivity, which is an essential component of improving the economic growth of a country.

Furthermore, the report also indicated that inflation measures remain low, which could complicate the FED’s plan to gradually increase interest rates. As we know, the FED’s favored measure of inflation is the personal consumption expenditures price index, which excludes volatile price changes in food and energy. The index grew by 0.9% in the first quarter, which was below the FED’s target rate. However, the central bank raised the rates by a quarter-point in the month of June, forming the third increase in 6 months.

With that in mind, the IMF has stated that its forecast for global growth stayed unchanged, given strengthening economies in Germany, France, Spain, Italy, Japan and Canada. The stronger global environment, combined with the recent weakness in the USD is likely to help boost American exports in coming months.
 
 

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