In the first quarter of the year, GDP grew 3.2 percent and consumer spending rose by 3.6 percent. U.S. President Barack Obama announced in an event at White House Rose Garden that GDP growth is an important milestone. Consumer is feeling more confident than a year before as U.S. economy continued to rebound in the first three months of the year.
GDP is the measure of the total production of goods and services, and according to an advance estimate by US Bureau of Economic Analysis, the fourth quarter growth was 5.6%.In the last months of 2009, restocking of depleted inventories was done and now the economy has started to show positive growth. Economists believe the trend will continue in coming months.
Some private economists had expected the growth to be more than the results. The main drag had been the reduction in expenditures by the states as the tax revenues fell, which resulted in cancellation of projects and imposed budgetary limitations on ongoing projects. The economy was benefited from restocking and the growth rate added by restocking was 1.6%.
A second estimate on economy will be released by BEA on May 27 and the reports may vary from current values. On Friday the report on April employment will be released by Labor Department. The expected gains in jobs can be around 200,000 and employment rate is expected to reduce to 9.6%.
Michigans economy to grow 3 percent or more in the year
According to the forecast made by the Chief Economist of Comerica Bank, Dana Johnson, the economy of Michigan will grow at the rate of 3 percent or more in the year. The result is the projected data, which comes from the decline in unemployment rate from 14.1 percent to 12.5 percent.
The major contribution to Michigans economy will come from the auto industry as the motor companies are preparing to show profits in the year and announcements regarding new hiring have been made by GM, which ensures job security to existing employee of the motor companies. Fresh hiring will also take place in the health and construction sector.
Last minute home buying to get tax credit
Tax credit of up to $8000 was given to first time home buyers who got into a home buying contract before or on April 30 .The purchases should be completed by June 30 and there were many home sellers who witnessed the 11th hour rush .Many sellers kept their offices open till late midnight on Thursday and Friday to allow buyers to get into the contract before the expiration of deadline. The seasonally adjusted sale of new single family homes was up 27% in the month of March as per the reports released by the Census Bureau.
Initially, the tax credit limit was $7,500 for the first-time home buyers and the amount was to be repaid in 15 years, later the limit was extended to $8,000 and the need for repayment was waived. The credit limit policy was set to expire on Nov 30 but Congress extended the limit to April 30 and additional tax credit benefits of $6,500 was given to repeat home buyers.
The National Association of Home Builders said they are lobbying to get extensions in tax credits but many believe it will not be extended. As the unemployment rate reduces and new houses are constructed, the effect of tax credit expiration will vanish.
Tax credit has not expired for Armed Forces members and some federal employees who are serving outside the country. They qualify for it till April 30, 2011. The contract for home buying should be closed by June 30, 2011.
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