The world’s biggest economy has finally made upturns relative to economic figures from late 2011, prompting President Barack Obama to call 2014 the ‘Breakthrough Year” for the US Economy. According to the Commerce Department, growth forecast has been revised upwards after the economy grew 4.1% in the third quarter, higher than the 3.6% estimate made earlier.
A significant portion of the improved numbers are attributed to stronger consumer spending, comprising approximately two-thirds of the US economy.
Similarly, business spending has been better than what was previously estimated.
The recent economic developments provided considerably favorable effects as Dow and S&P 500 indexes closed with very encouraging numbers.
President Obama, in his last press conference for 2013, cited how the improving figures are hinting a promising 2014 for the United States economy. He mentioned that America is heading to a new year with a stronger economy and with more Americans finding employment and enjoying the pride of receiving a paycheck.
Upbeat Obama Amid Low Ratings
Nearing the end of his fifth year as the United States President, Obama is seeing his approval and personal favorability ratings going to record lows. However, as he plans on flying home to Hawaii for his annual Christmas vacation trip, he comes out touting the good news.
Obama’s vacation trip this year is also enjoying the positive vibe, as it is the first time that he does not have to delay plans to attend to official matters in the US capital.
The President acknowledged how he “screwed it up” in rolling out his administration’s controversial health care law. However, he promised that the system has significantly been improved.
Also, despite a seemingly triumphant stance in terms of economic gains, the President asked Congress to create laws that would benefit the long-term unemployed. He chided some legislators for going to their Christmas vacation without acting on what they ought to be doing first.
Asked if 2013 has been the worst year for him, President Obama responds: “That’s not how I think about it.” He said that his administration has been through many ups and downs in the same way his ratings have gone up and down through the years.
Good Market Performance
The Dow Jones Industrial Average saw a 3% increase for the week, achieving a record level. The rise is believed to be on account of the recent economic data and the US central bank’s decision to scale back its stimulus program.
The Federal Reserve, the United States’ central bank, recently announced that it is “tapering” the country’s economic stimulus program, particularly its bond buying program, from $85 billion to $75 billion a month.
Nasdaq and S&P 500 similarly enjoyed uptrends. Nasdaq closed at 1%, topping the 4,100 mark for the first time since the last month of 2000’s third quarter. S&P closed at a record high.
Analysts are not keen on calling the overall market performance as something “great” but they are describing it as “good” or “better.”
FTN Financial’s Chris Low and Jay Morelock, in a research note, wrote that the recent mix of growth numbers look better as the third quarter GDP stood above 4%, only the third time to happen since 2009.
Sal Guatieri of BMO Capital Markets Economics commented that the strong third quarter growth is a vindication for the Fed’s decision to scale back on the stimulus package. He adds that the economy is poised for a better performance in the incoming year in comparison to the mediocre 2% rate of the past year.
Photo Credit: President Barack Obama
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