US Recession Finally Easing?

US Economy May Finally Be Moving Towards Recovery

First Published Date : September 6, 2009

Although most of the major economies in the world have been through no small amount of turmoil in 2009, most eyes have been turned towards the performance of the US economy due to the nation’s status as a world leader. This is one time when America would have been prepared to cede the limelight, however, as the financial predictions chart has constantly shown the States and the United Kingdom as the countries in deepest recession and with the latest predicted recoveries of all. Now, however, there are coherent signs that the US economy may finally be moving towards recovery, with second-quarter showings in 2009 looking better than had been expected. The economy still contracted, but only by one percent.

To make a comparison, the January through March period this year showed a retraction of more than 6%, an opening to the year which was enough to make many wonder aloud whether the US would see any kind of recovery before 2010. The fall was the worst for almost thirty years and American’s third straight contraction. This latest marks the fourth in a row – clearly not what would be desired – but the movement is certainly more positive than anyone had been led to hope. It would be optimistic to suggest that Q3 will show growth in the numbers, but Federal Reserve Chair Ben Bernanke has been moved to suggest that the recession will be over for America later in 2009.

Reasons for the better performance are believed to be something of a mix, with businesses smoothing off spending cuts and government spending increasing. A better trade performance with other nations also helped, while consumer spending did decrease, as the results of businesses going to the wall made themselves known, people having to dip into their savings and being less able to rely on the equity in their homes for a shield against the ravages of unemployment. However, given the forecasts for how 2009 was expected to head, the news is broadly a lot more positive than could have been expected.

Some of the credit from economists has gone to the stimulus package fronted by President Barack Obama, which cut taxes and increased the level of government spending. This plan allowed the economy to stabilise somewhat by lessening the burden on services and businesses, keeping some companies alive and allowing support to be provided where needed. As yet, though, economists believe that the best of the package’s results has yet to come, with the second half of the year expected to see the outcome bloom and the early stages of 2010 considered to be the point where the full extent of the stimulus will be evident.

Economists know to couch their optimism in cautious language, and there are no guarantees as things stand, but money does not always behave like we want it to, so there is plenty of reason for cautious speaking. The advice seems to be that America should stick to what it is doing now and monitor the results. If these are as positive as expected, then 2010 will see a world in recovery, given the improvement in economies elsewhere.