A Recovering Economy Sees Slow Growth

 

This is close to the amount provided under the initial American Recovery and Reinvestment Act of 2009. While much of this total results from extending existing provisions, some new initiatives are also included, such as a temporary reduction of social security payroll taxes.
Courtesy of HealthInformatics

Even though the national economic recovery is over 18 months old, it has yet to gain much traction, according to Kermit Baker, AIA Chief Economist. The gains from mid-2009, when the recovery began, through the spring of 2010 were partially eroded by a brief set-back over this past spring and summer triggered by the European debt crisis.

However, healthy growth returned this fall, with solid numbers coming from the manufacturing sector and consumer spending. After declining 9.3 percent last year, manufacturing activity increased close to 6 percent in 2010. Retail sales likewise increased an estimated 6 percent in 2010 – accelerating during the critical holiday shopping season – after falling 6.5 percent in 2009. These growth factors can definitely help boost the landscape industry.

There are several factors that will help to ensure continued strong growth in the economy as the year progresses. At the top of the list is the tax package enacted in late 2010. By extending the Bush-era tax cuts and unemployment benefits, this package will provide close to $860 billion in fiscal stimulus to our economy.

Additionally, bank lending restrictions are beginning to thaw. According to an October 2010 survey of senior bank lending officers by the Federal Reserve Board, over the prior three months banks eased standards and terms on some categories of loans to households and businesses.

In spite of this positive movement, the same survey reported that standards for many categories of loans would not return to their longer-run averages anytime soon. However, the lending that is occurring is at historically low rates. Long-term interest rates have recently begun to drift upward, but actions taken by the Fed to stimulate the economy have allowed many households and businesses to restructure their debt at favorable rates.

– Courtesy of AIA