U.S economy is still groveling on the ground

CNN Money’s economic survey review states that U.S economy is slowing down again. In the last quarter of 2010, an impressive growth of 3.1% was perceived, signaling a economic turn around. But last few months of the current year has been giving us a dismal image of sluggishness in the growth of GDP. Even the second quarter of 2011 is receding in growth from the first quarter. A 1.9% growth in the first quarter has slopped down to 1.8% in the second quarter. In this context, the picture has taken a completely new turn from the year ending of 2010.

The running year has witnessed a series of disasters from steep rise in gas price to sovereign debt crisis in Europe. Natural disasters also catered to the collapse major world economics. Even, lawmaker’s wrangling over debt ceiling issues hasn’t done much good to carry the economic growth in the positive direction.

All these combined factors are exerting a telling effect on the capacity of consumer spending. U.S consumers that once spent 70% of U.S gross domestic product are now losing their confidence. Ellen Zentner, a senior U.S. economist of Nomura said that “we don’t have households reaching for credit. They’re still very much mired in that mind set of paying down debt, rather than taking on debt. And that, on top of a weak labor market, is keeping consumers from spending.”

The precipitous rise of oil price has hit the wallet hard for most consumers who are now spending mostly on bare utilities. In February, consumer spending habits were just about showing some positive signs. But, in the following few months it again received a big jolt due to increase of gas price. Since 2008, the gas price rose to a head spinning level of $3.98 per gallon.

The health of job market is getting anemic. In the beginning of the year recruitment was going in the full swing. But, again in next few months, the figure got tapering off. After providing a massive opening of 497000 jobs, now employers are pulling the break. In last June, job market was really at a poor state.

Real estate market is hardly showing a pulse since low house price is continuing to hit hard to the residential investors and impacting on the consumer spending habits.

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