The U.S. economy is ready in 2015 after an eventful journey last year that started with a severe winter locking consumers indoors and a loss of steam in the market. Then the economy started to rebound and the Federal Reserve hinted at a recovery by winding up its stimulus program which was initiated to boost economic growth and keep interest rates low.
The economy now looks to have enough steam to carry the momentum, in spite of a slowdown in China, turmoil in Russia, sluggishness in Japan and a struggling Europe. The confidence in an uphill ride amid a shaky international front came mostly from the third and final data for real gross domestic product (GDP) that unveiled the fastest rate of economic growth since the third quarter of 2003, giving the market sufficient impetus.
The economy registered growth of 5% during the third quarter of 2014, according to the “advance estimate” by the Bureau of Economic Analysis. The rate fared better than the second and first projections of 3.9% and 3.5% increases, respectively. Higher business investment and export along with improved consumer spending laid the foundation for a strong GDP.
Gradual recovery in the housing market, a strengthening manufacturing sector, an improving labor market and falling gasoline prices also favored the economy, and boosted consumers' disposable income. Consequently, the economy returned to the growth trajectory in the second quarter, when it increased 4.6%, after falling 2.1% in the first quarter due to inclement weather. Market experts believe that improvement in global economy hinges upon the U.S., which is expected to grow at a pace of over 3% in 2015.
Low oil prices and rising wages are good for U.S. consumers. And with consumer confidence – a key determinant of financial health – reaching its recent heights, the future looks bright for the economy. The data released by the University of Michigan and Thomson Reuters showed that the consumer sentiment index buoyed up to 93.6 in December from the November reading of 88.8, and was at its highest since Jan 2007. According to the recent Conference Board data, the Consumer Confidence Index increased to 92.6 in December from 91.0 in November.
