Economic Growth Of The Economy - 1506 Words

Economic growth rate can be measured as an increase in the capacity of an economy to produce goods and services, compared from one period of time to another (Investopedia). Ylan Mui and Nelson Schwartz offer information on what is stagnating our nation’s economic growth. Many have been looking at the economic growth of the third quarter very disheartened. U.S. economic growth during the third quarter expanded at a 1.5% rate, which is considerably lower than the last quarter. There are many reason that the economy is experiencing this lackluster growth, and there are several terms necessary for understanding economic growth as it relates to the article. They will be introduced as we dissect the information presented. Inflation can be†¦show more content†¦Personal consumption makes up a large part of our country’s gross domestic product (GDP). In fact, consumption by U.S. citizens, on things such as insurance and healthcare, have grown more than twice the pace of growth in other parts of the economy. This a large contribution to our national GDP. Scott Clemons, a chief investment strategist commented saying â€Å"[†¦] the persistent strength of personal consumption bodes well for a continued modest expansion in the U.S. economy† (Schwartz). Even still, many manufacturers and businesses are being forced to cut production because they anticipate this lack of growth will continue into the next year. A part of the economic slowdown is contributed by the slow inventory accumulation of businesses. Many businesses have opted to let the goods that they have in inventory slowly diminish, rather than make new additions. This is unlike the strategies they used at the beginning of 2015 when there was more economic certainty. However, now that businesses are cutting production, they have increased their business investment. We see trends in business investment in equipment and intellectual property (Schwartz). Companies have opted for the ‘law of diminishing marginal return’, which states that savings and investment in capital is a source of labor productivity, it will not be sustained without technological advances and increased human capital (Bade, Parkin). Many businesses are hoping that these investments now will lead