Now that five years have passed since the economic downturn, Americans still find it hard to believe that the economy will improve.
U.S. consumers have lost confidence when it comes to the country’s economy
Reflecting a new uncertainty following the budget cuts that were imposed by the federal government. In fact, confidence has fallen from 68% back in February to 59.7%. Economists say that the decline was due to expectations about the nation’s future growth.
Last November, Barack Obama was re-elected as the U.S. president and experts say that his presidency will be defined by the success of the economy and not much else. Expectations of the end of last year fared better than was first thought. People are looking to the president to repair the economy so they will not have to continue to suffer the consequences of the financial and banking crisis of 2008.
Unemployment Is Down
This past year brought good news for Barack Obama: Unemployment in the United States has fallen to its lowest level in nearly three years. Thus, the expectations of most experts were significantly affected. In December alone, the company created by the Department of Labor netted about 200,000 jobs, so the unemployment rate fell to 8.5 percent – the lowest level since February 2009. For the full year of 2011, 1.6 million new jobs were created.
The unemployment rate averaged 8.9 percent, up from 9.6 percent the year before. If this positive trend continues, according to the forecast of many economists, up to 2.1 million new jobs will be created in 2013. The reason for the optimistic expectations: The U.S. economy has recently gained momentum. There are some signals in the financial markets that the highly regarded economic index is improving – indicating a growing demand for jobs.
The economic acceleration is due to the fact that individual stress factors – like the continuous failure of the Japanese auto suppliers and European banking problems. Also, energy prices have stabilized. But above all, consumer spending, which is approximately 70% of total revenue have economically contributed to union demands and corporate investments. For 2013, the economists expect a growth rate that is between 1.4 and 2%. This is not about outstanding development but in the weakening world economy. By comparison, many EU countries are likely to see the economy grow this year as well.
Large Public Debt
A mountain of problems is still present and the United States is far from being over the hill. The gigantic public debt, which is over $15 trillion, is a huge problem on which the American people will have to nibble on for a long time. The fiscal withdrawal in late 2012 is higher than in the European area. The unemployment rate is still at a shockingly high level by American standards, as the financial crisis cost the country around 8.75 million jobs and only a small part of that number has been re-created.
The outlook for consumer spending is more than uncertain; during 2011 and 2012, Obama saw households draw on their savings rather than spend due to financial uncertainty. The economy and the overall economic impact is improving though but consumers are in the same miserable situation concerning the housing market that they were in a few years ago. Nearly one-third of all homeowners with a mortgage contract is overly in debt. These late effects of unsound promotion of home ownership will take years to recover. Here is Obama's presidency in a nutshell.
He created the controversial adoption of billions in economic stimulus packages that was supposed to allow an increase in employment. It did not work. Businesses still laid off people and found out that they can operate without the help. This sort of demand-side policy has prevented an even greater increase in employment. The stimulus packages had driven the already high public debt further up. The American public wants their economy back but it is just a game of wait-and-see for now.
Tips
If you were amongst the US citizens who were hit by the downfall then you must have realized by now that you can't really depend on any institution to improve your personal and future financial situation. What you need to do is start to educate yourself and take full control of where and how your finances are invested and the risk level at which you are willing to take. Global Finance School is a leader in interactive online finance courses that can help you achieve that goal. We would highly recommend that you read some of our very informative articles such as How To Buy Stocks For Beginners on our blog and start to understand the basics in the financial world.
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