Recent US economic figures show the country is on track for one of the most buoyant years since the beginning of the crisis. Economists believe 2015 will be the strongest for a decade and point to several factors driving economic growth. These include consumer spending, job creation and the US property market.
Steady GDP growth
GDP growth in Q4 last year registered 2.2 per cent, seen by analysts as a healthy rise and signs of sustainability in the economy. The 2.2 per cent does represent a marked drop on the 5 per cent in the previous quarter, but analysts point out that during Q3 2014 activity was driven by a number of one-off events such as a 16 per cent increase in defence spending.
Increasing consumer spending
Consumer confidence is showing steady growth – consumer spending recorded a 4.2 per cent increase in Q4 last year. This hike represents the highest quarterly growth for nearly a decade and is particularly significant because consumer spending makes up 70 per cent of economic activity in the US.
Job creation is also on a steady rise. Figures for employment for the last three months represent the best for the last 17 years – 423,000 jobs were created in November, 329,000 in December and 257,000 in January. Economists fully expect this tendency to continue during 2015, which will in turn boost consumer spending and by extension, economic growth.
Sustainable property market
Along with booming job creation and increased consumer spending, the US property market is also experiencing steady growth. January proved to be a particularly good month with pending home sales reaching their highest level since August 2013. The National Association Realtors (NAR) reported that their ‘Pending Home Sales Index’ rose by 1.7 per cent at the beginning of the year to reach 102.5 (a year-on-year increase of 8.4 per cent).
NAR forecasts steady and sustainable growth for US properties during 2015. The total number of sales is expected to reach 5.26 million, up 6.4 per cent on 2014. In terms of prices, the NAR predicts a rise of around 5 per cent across the board, a figure considered to be a sign that the market is maintaining steady, sustainable levels.
Sources: Associated Press; National Association of Realtors