An economy is the amount of money made and used in a particular country or region. The United States is the world’s biggest economy, accounting for roughly 16% of the global economy. The European Union, which is made up of 27 European countries, is the world’s biggest economic region, accounting for 17% of the world’s economy.
Economics look at a number of factors when considering the relative strength of an economy. One of the main considerations is the gross domestic product (GDP). GDP is a measure of all the goods and services produced in an economy and it is generally calculated on a quarterly and annual basis.
Sustained economic growth positively impacts income, employment levels, consumption, and the overall standard of living. In a strong or growing economy, businesses increase their sales, hire more people, are more confident about the future, and invest more in their companies. Consumers earn more, are more optimistic about the future, and spend more.
In the years leading up to the 2008 financial crisis, the U.S. reported annual GDP growth of around three percent. Since the 2008 and 2009 recession, U.S. GDP has been more subdued at around 2.2%.
When considering the strength of an economy, economists also look at inflation, interest rates, jobs growth, consumer demand, population growth, standard of living, and social and political factors.
By measuring this data on an annual basis, economists can determine if an economy is expanding or contracting. An economic analysis can also help investors get a general idea of market conditions and possible trends.
30 of 33 Banks Pass Federal Reserve’s Stress Tests
Santander and Deutsche Bank Get Rejected The Federal Reserve recently reviewed the capital distribution plans from 33 of the biggest banks in the U.S. The Fed only rejected two. (Source: “Federal Reserve releases results of Comprehensive Capital Analysis and Review.
Improving Economy: U.S. Consumer Spending Up 0.4% in May
Spending on the Rise Personal spending continued its second-quarter rebound with a 0.4% rise in May, showing that at least one engine in the U.S. economy is firing. Consumer dollars are one of the driving forces behind economic growth. (Source:.
Rating Agencies Downgrade U.K. Government Bonds
Fitch and S&P Cut U.K. Rating Two of the world’s biggest rating agencies have downgraded the United Kingdom in the aftermath of the Brexit. The cuts were widely expected after the majority of Britain voted to leave the European Union..
U.S. First-Quarter GDP Revised Upward to 1.1%
New Data Shows Stronger U.S. Economic Growth According to new data, U.S. economic growth for the first quarter of 2016 was better than previously thought. The country’s gross domestic product (GDP) grew at 1.1%, rather than the 0.8% initially reported..
U.S. Home Prices Rise 5% in April
Case-Shiller Index Shows Optimism U.S. home prices jumped significantly in April, adding yet another data point to the optimistic portrait of the U.S. economy. National U.S. home prices spiked five percent during those 30 days, according to the S&P/Case-Shiller Home.
Fed Rate Hike Odds Plummet After Brexit
Markets Predict Yellen Will Hold Steady For the last several months, markets have been pricing in another interest rate hike from the Federal Reserve. At one point, the probability of a 2016 rate hike reached 80%, but then the Brexit.
U.S. Manufacturing Sector Expanded in May
Several indicators have been suggesting a growing U.S. economy. This time, it’s the Purchasing Managers’ Index, or PMI. Today, the Institute of Supply Management (ISM) published its latest report on the U.S. manufacturing sector. It suggests that in May, the.
U.S. Economic Growth Slows, but Beats Estimates
The U.S. economy did not have a great start in the first quarter of 2016, but the latest report suggests that growth was not as slow as previously reported. Today, the Bureau of Economic Analysis released its latest estimate for.
Inflation Sees Largest Spike in Three Years
The prices shoppers are paying for goods and services saw its biggest increase in over three years last month, thanks mostly to the higher cost of gas and rent. Today the U.S. Bureau of Labor Statistics published its monthly report.
U.S. Job Gains Slow Down to 160,000 in April
Analysts have been expecting the U.S. labor market to start tightening, but the latest release from the Bureau of Labor Statistics might raise some concerns. Today, the U.S. Bureau of Labor Statistics said that total non-farm payroll employment increased by.