US economic growth outlook for 2021 is looking strong and the US economy is expected to have a stronger performance in the coming quarters, according to economists. The US gross domestic product (GDP) is expected to grow by about 3% in the third quarter of this year and the fourth quarter of this year, according to the estimates. The US gross domestic product is primarily affected by the health of the US consumer and the business sector in the US. There are several indicators that point to US economic growth.
Consumer Spending: Consumer spending in the US has picked up in the third quarter of this year. The increase in consumer sentiment was broad-based across many aspects of consumer spending including gasoline prices, food, clothing and home improvement costs. Inflation did not rise significantly in Q3. US consumers appear to be holding their breath until rates start going higher. This will definitely have an effect on economic growth in the US.
Manufacturing: In this slow economic growth year, US manufacturing is expected to show slight gains in the second half of this year. Some think this is only temporary, but with the US consumer is picking up, there should be some additional manufacturing in the US. In Q3, manufacturing accounts for around three-fourths of the US economic growth. The business cycle in the US is following a “tight” recovery and most business analysts do not expect the current level of inflation to last long. As such, they suggest that the US economy will only experience minor inflationary pressures until mid-2021. As such most economic analysts do not see any reason why the US economy should pick up from this low point.
Trade Imports: US economic growth is expected to continue at the slowest pace in almost two decades. US exporters are expecting a slow but steady rise in exports in the next few years. They see US consumers keeping down the purchases of imported goods due to high exchange rate pressures and a slow recovery in the US economy. However, the trade deficit will still be small as the US consumers should start buying domestic products once again to reduce their import costs.
Consumer Spending: Although consumer spending is seeing a slight slowdown in its pace, US consumers are still expected to enjoy an average annual pace of spending of three percent above the average of the past five years. This is a positive sign for the US economy as it points to the fact that consumers are still capable of spending money despite the global economic turbulence. Moreover, US consumers are still willing to spend despite the high exchange rate pressures and slow recovery. As such, the US consumer spends still contributes to US economic growth.
Tourism Industry: US consumers are spending on other parts of the world to counter the high inflation and high exchange rate pressures. On top of that, they are also encouraged by the fact that foreign travel is now one of the major drivers of US economic growth. In addition to this, leisure . . . . . . and entertainment industries are also seeing strong growth as US consumers are now more willing to splurge on entertainment options. In fact, US travel and tourism have been one of the pillars of US economic recovery since the onset of the global economic crisis. Hence, if you want to see US get back to its feet faster, then you should start enjoying more from this sector starting with tourism.