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US growth reaches 2.5%, but may be unsustainable

Published time: September 26, 2013 17:46
Reuters / Carlos Barria

Reuters / Carlos Barria

The US economy grew by 2.5 percent from April through June, the Commerce Department has said. While the second-quarter result was an improvement on the 1.1% growth in the first quarter, how sustainable the growth will be remains a big question.

The Q2 GDP figures come at a sensitive time for the US government as it contemplates the future of its massive stimulus program, as well as the debt ceiling. How sustainable growth is now plays a key part in decision-making. Last week, the Federal Reserve shocked markets at its September meeting, when it decided to keep its monthly stimulus at $85 billion. The Fed said then it wasn’t sure the US economy was strong enough to do with reduced monetary support.

Lately, the US has been showing some signs of recovery, with the housing market gaining momentum and unemployment sticking at 7.3 percent – the lowest since 2008.  “We think the US economy is on a recovery track, and see it expanding 1.8 percent this year,” Yaroslav Lissovolik, chief economist at Deutsche Bank, told RT.

However, another market analyst, Igor Nikolaev, director of the strategic analysis department at PKF, told RT that the growth wasn’t sustainable. With inflation still running below the Fed’s 2 percent target, and the national debt skyrocketing to $16.9 trillion, the US needs to come to terms with its reckless spending habits.

“The US economy is like a sick patient with a rash, and it’s still unhealthy,” Nikolaev said.


Comments (6)

 

tyler 30.09.2013 01:08

Andres Bustamante 29.09.2013 03:50

It is a true testament to the failure that is capitalism.

  

That might be true if we were a true Capitalist society. Capitalism is a free market society where consumers promote goods and service through purchase based on needs and wants; which is ultimatley how a capitalist society is meant to evolve. However, capitalism begins to be non-existant when government props up failing corporations with bailouts; which means goods and services is just a goverment promoted life style, like socialism only not favor of public needs; Hence the term corportism

 

Andres Bustamante 29.09.2013 03:50

What growth? I must be living in a different United States because there is no growth. In fact, this entire country looks like a dilapidated trailer park. It is a true testament to the failure that is capitalism.

 

Berit Andersson 27.09.2013 13:28

Det big problem with US economy is that the QE-programs creates stagflation within OECD.
Money printing leads to artificial higher rawmaterial prices meanwhile de aggregated demand in the overall economy is low.
This leads to lower Company profits and mass unemployment within the OECD economys.
US budget and monetary polcies becoms the biggest hinderance for global economical recovery.

View all comments (6)
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