The US Economy maintains growth

Although maintaining high cost of oil has had certain effects on the growth in the United States, the US economy still experienced a relatively strong rising trend in the first half year, and holds good prospects for the next half year.

According to the latest released report of American government, the economy's growth rate reached 5.6 per cent in the first quarter, the fastest growth since the 7.2 per cent obtained in the third quarter of 2003, which can be owed to the economy's usual consumption and boost in domestic demand.

At the same time, the investment from enterprises keep expanding; export has sped up and import slowed down, and the burden of trade deficit has eased to some extent; unemployment rate continued to decline to 4.6 percent, the lowest in the past five years; despite the great pressure to commodity prices caused by the sharp rising price of oil, the inflation rate still stayed at a relatively low level.

Several reasons can explain the growing trend. Two of which accounts for the greatest: one is that the economy grew and the unemployment rate declined, especially the investment in the real estate market has lead to the steady increase of household incomes, in order to promote the individual demand; the other is that the adjustment of energy strategy dramatically strengthened the capability in response to the impact of the expensive oil.

However the challenges still require great attention. If not dealt with properly, those existing problems would make the US face greater risks. First, the pressure of inflation has apparently enlarged and the impact from the bull market of energy has shown up. Second the disadvantageous affect made by the advancing interest rate to individual consumption and enterprises' investment. At present the federal fund rate, namely the inter commercial bank day-to-day borrowing rate has jumped to 5.25 per cent, the highest since the end of January 2001, which would certainly influence the consumption and investment market. What needs to be pointed out is that the running up of short-term interest rate already pulls the rise of long-term ones, and the housing mortgage rate goes on climbing. The report issued last Thursday shows the 30-year housing mortgage rate has risen to 6.79 per cent, reaching a highest level over past four years. The continuous rising would probably cool the heated real-estate market.

Besides the imbalanced economic development, low saving rate, etc. are also problems assailing the development.

The White House forecast that their economic growth would reach 3.6 per cent this year, 3.3 per cent and 3.2 per cent in the next two years. Based on the calculation of the standing-high energy prices, the price would be higher than the previous estimation and overrun 3 per cent, but will not be beyond control. Therefore, this year the United States will be in the track of steady growth and there is little possibility of experiencing large problems.

By People's Daily Online