Many economists believe that US economy will continue to grow around 3.5 percent in 2011, led by pickup in consumer and business spending. The extension of Bush-era rate cuts will add moderately to GDP growth, while at the same time as increasing the budget deficit.
US economy grew just less than 3 percent and unemployment hovered just below 10 percent for the year 2010, while stock markets recorded good gains with the S&P 500 rose about 12 percent, the Dow gained more than 10 percent and Nasdaq advanced around 16 percent.
Economic growth:
US economy is expected to grow around 3.5 to 4 percent range in the year 2011 compared to just under 3 percent growth recorded in the year2010. The economy will derive more of its growth from revived consumer and business spending and Personal consumption expenditure (PCE).
Consumer spending accelerated to 3 percent in the third quarter of 2010 compared to 2 percent pace in the previous quarters. Economists forecasting that it could accelerate up to 4 percent in the fourth quarter on back of strongest holiday season since 2005. But at present consumer confidence remains at low so there is a much scope to improve in sentiment which will improve consumer spending.
PCE is contributing between 0.7 percent and 2 percent to overall growth. The component has gained for five consecutive quarters and is expected to grow around 1.9 percent in 2011.
On the other side, financial contagion from Europe, budget problems at state and local governments, and falling house prices all could lead to slower U.S. growth.
