It is notable that the economy has improved in the last four years due to the adoption of various approaches after the negative effects of the recession. The positive gains are expected to continue in the future. This outlook considers improvements in households, business establishments and public-sector engagements. The Federal Reserve’s efforts have produced positive results with regard to controlling interest rates. This has enabled individuals and business organizations to acquire loans for starting and expanding their businesses.
Indeed, the economy is influencing many sectors. The example to illustrate this is the housing industry, which was among the worst hit areas by the recession. Through the implementation of strategic approaches, mortgage rates have fallen considerably. Current mortgage rates are about 3.5% to 3.8%. The drop in mortgage rates could imply that many citizens may afford housing facilities. The overall effect of the affordable mortgage rates cannot be understated.
If most of the citizens are able to afford mortgages, then there is increased demand for homes, which improves the sales and prices. Presently, the rise in the prices of houses is estimated to be a double-digit. Improvement in the prices has ensured that the underwater homeowners are able to repay their mortgages because the prices of their property are much higher than their mortgages. The significant savings on mortgages have ensured that homeowners are left with much money to cater for other things.
However, it would be important to assess why the whole economy is not gaining momentum with regard to positive gains. Several reasons could be adopted to explain the stagnation of the momentum. First, the recession that hit the world affected tax revenues. Both the local and state governments were negatively impacted with regard to spending and employment. These areas have not yet recovered. Second, the federal government is not doing well enough to support considerable improvements of the economy.
During the recession, the federal government reduced taxes and implemented strategies that could support spending. The measures helped the economy at that time, but they resulted in a negative impact on the overall economic performance after the recession. The effects of the federal fiscal policy have led to higher taxes, which have affected upper-income Americans. Third, the trade partners of the US were also affected by the recession. For example, budget deficits are quite wide in Europe.
Thus, Europe is characterized by insignificant growth in the context of spending, which could result in positive gains for the overall economy. Currently, fewer American products are being sold in Europe. It would take quite some time for the economies of major trade partners of the US to improve. However, not all countries were affected by the recession. For instance, the Bank of Japan is expected to surpass its target with regard to inflation. If the goal is achieved, then it could result in better trade outcomes with the US.
The US economic outlook is very bright. Since the recession period, the economy has managed to improve employment through the creation of about 6 million jobs. This translates to 2.5% drop in unemployment. Economic outlook also focuses on the growth of GDP of the US, which reflects the country’s output of goods and services. This year, the GDP is estimated to grow by about 3.25%. The targeted growth will be essential for the overall economy of the US in the context of the short-term and long-term projections.