US Economy Grows at Fastest Rate in 11 Years
The United States economy grew at its fastest pace for 11 years in the third quarter of 2014 as it hit an annual rate of 5%, according to official figures. Second quarter growth in the country stood at 4.6% so this further rise will be welcome news to many.
A lot of this growth predominantly came from consumer spending, which accounts for around two-thirds of US economic activity, which grew at an annual rate of 3.2% which is the fastest it has been since the fourth quarter of 2013.
This consumer and business spending led to a growth in the Gross Domestic Product (GDP) which had been predicted to rise at 3.9% for the period of July to September. Business investment also grew at a stronger rate than had been previously expected as it topped estimates of 7.1% to come in at 8.9% with spending on equipment, intellectual property products and non-residential structures boosting that figure.
However, it has been predicted that such strong growth is simply unsustainable and that the fourth quarter growth postings will come in at a slower 2.5% annual rate but this still leaves predicted growth of 3% in 2015, on course to be the fastest rate of growth since 2005.
The United States was hit by the global economic downturn in 2007 and struggled with recession until 2009. Now out of the woods, growth has been sluggish to hit its pre-downturn peak averaging at around 2.2% annually compared to the 3.3% annually that it had been at in 2005.
However, analysts have forecast that returns to similar levels could well be on their way as businesses become more confident about taking on more employees. With the current unemployment rate sitting at 5.8%, more people are working than have been for a very long time and if further gains can be added to this area, consumer spending is also expected to increase significantly further fuelling growth in the country. Consumer spending makes up about two thirds of US economic activity and is vital to the country.
This further stability has increased speculation the central bank, the US Federal Reserve, will be raising interest rates in 2015 after they finished their successful program of quantitive easing.