Question Crystal Finance & Economics

Is the U.S economy in decline?

IS THE U.S ECONOMY IN DECLINE TODAY AND IF SO WHY?

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Answer Internal Staff

The US economy ended 2015 on a stronger footing than expected, providing some reassurance as the global outlook falters. The recovery though remains steady. A robust labour market and still rising house prices are providing the ballast for an economy that is facing weaker growth overseas, a sharp contraction in its manufacturing sector and retrenchment in the once booming oil industry.

Official forecasts are for the pace of growth to remain steady this year and next, before slowing slightly in subsequent years. The US is expected by the IMF to be the fastest growing advanced economy over the next few years.

The Federal Reserve decision to be the first major central bank to raise interest rates has helped support the dollar in recent months. The dollar remains buoyant against most major currencies. Despite a high Debt-GDP ratio (104% of GDP), the cost of government borrowing remains low by historic standards, and has dipped again recently as the prospects of another immediate interest rate rise have receded.

The US jobs market leapt back to life in June 2016 following a torrid May as hiring accelerated at the quickest pace since October 2015. The new numbers are pushing aside fears that the US is flirting with recession and providing encouragement to Fed officials who argue that the US is closing in on full employment and that monetary policy needs to respond in the coming months. The Fed estimates the long-term unemployment rate is 5-5.2 per cent, with the latest data showing the rate to be below that.

Despite facing challenges at the domestic level along with a rapidly transforming global landscape, the U.S. economy is still the largest and most important in the world.