Expected U.S. Gdp Growth Rate Going Forward

Abstract

The United States is the largest, wealthiest and most influential financial market in the world. The United States GDP doesn't just affect the United States, but it affects other countries as well, such as Europe having to close stock shares at a lower amount due to the growth of the United States not meeting expectations (CNBC, 2013). In this essay, I'll discuss GDP trends, forecasts, statistics, how it's determined and how to interpret it.

Expected U.S. GDP Growth Rate Going Forward

The United States is the world's largest national economy with an estimated Gross Domestic Product (GDP) of $16,010.2 billion reported in the first quarter of 2013 which is an increase of 3.7% or $146.1 billion from the 4th quarter of 2012 (Bureau of Economic Analysis, 2013). In normal times a 3.7% increase in the GDP growth rate for the United States would be considered good, but based on the ever growing debt, the United States is barely making it.

Although states will not grow at the same pace, the economic health of 44 states, not including New Jersey, Maryland, Wyoming, Maine, Arkansas, Nebraska and Delaware, managed to have an improvement in the fourth quarter of 2012, which is the most growth of states in either employment and/or personal income in any period (Kolet & Preston, 2013). According to Joseph Brusuelas, Senior Economist with Bloomberg LP in New York, the economy will continue to grow around 2% as it has since the start of the recovery (Kolet & Preston, 2013). Although there is an $85 billion automatic federal budget cut in place, this could still lead to continued job loss and reduction in federal grants awarded to some states according to Robert Dye, Chief Economist for Comerica Bank out of Dallas, TX (Kolet & Preston, 2013).

The GDP is intended to show how the economy is functioning, whether or not it's getting better or worse and measures the spending and production of the United States on a quarterly basis. There are many things that will affect the GDP such as taxes, debts, interest rates, unemployment, consumer spending and the failing real estate market. The GDP can either be determined or calculated by adding everyone's annual income and the gross profits for firms and taxes less government subsidies or by adding everyone's total consumption, investments, government spending and net exports (Koba, 2011). Whenever the state of the economy is healthy and progressing, the unemployment rate is lower and wages increase and if the state of the economy is unhealthy or failing, the unemployment rate increases as businesses are unable to maintain wages for employees and therefore must lay them off (Koba, 2011). If the GDP slows down too much or stays in the negative too long, it could lead to another recession and lower profits for investors (Koba, 2011). I think of the GDP in terms of being a stock, sometimes it's up and sometimes it's down, but eventually it will stabilize but it may be a long hard road getting there.

Since January 2013 and reported in April 2013, the unemployment rate declined by just 0.4% or in other words, the number of unemployed persons decreased by 673,000 (U.S. Bureau of Labor Statistics, 2013). The increase in real GDP in the first quarter 2013 primarily reflected positives contributions from personal consumption expenditures, exports, residential investments,