How to analyze economic trend?

GDP(Gross Domestic Product) is an important index in macro economy.GDP growth rate measures that how much total values increase than last year.GDP data is so vivid.It can tell us that the increase that already happened in the whole year.

But we focus more on the increase speed and its trend in the future. Can we do that?And how? Of course,we can in some degree.

The key of analyzing economic trend in the future is that to judge where the driving force is and what the potential risks are.Just looking at GDP is not enough to make a correct judge.For example,China economy includes manufacturing,financial,real-estate and so on,these industries experience a big change,but these changes were not shown in total GDP growth rate.

We have a basic strategy to analyse macro economic trend.That is to grasp the basic structure of economy,then to find the corresponding driving force, and to judge the trend.Let’s take America economy as an example.

America is a consumption driving type economy.Based on employment,housing price fluctuation as impact. The past decade has been the the biggest volatile in the USA since World War II.

From 2007 to now ,America economy already spent 10 years to recover from the economic crisis.The crisis of 2007-2009 was called Great Recession.Its severity was second only to the Great depression in 1930s.What did happen during these time?Why did these take such long time?Why did we say that America is already get rid of the shadow of crisis?Let me tell you.

The parts consisting the America GDP includes personal consumption,fixed investment,real-estate investment,government expenditure,exports and imports.America has experienced four stages:prosperity(2004-2006),depression(2007-2009),initial recovery(2010-2013),recovery(2014-2016).

Comparing the four stages,we can easily see that the main reason of growth ups and downs is because of the changes of personal consumption.Before 2007 boom,America GDP grows about 3%,and the contribution of the growth of consumption occupied two-thirds.And it almost downs to zero during the crisis.

Corresponding to that,the rate of unemployment ups to 10% from 4.5%.It said that the crashing of American personal consumption makes America economy stop increase during 2007-2009.

Why did these American residents stop consuming.There are two reasons making these happen.

First of all,the unemployment rate sharply increase.To solve this problem,The government of America has issued a large number of monetary and fiscal policies,then the employment market recovers slowly.And Help bring out the whole America economy out of the mire.

The other important reason is the great crash of real-estate investment.

Two-thirds of American people have their own houses,so the volatile of the housing price directly affected their wealth and consumption.

In America,the amount of real-estate investment is just 5% before the crisis.So real-estate market is not the main conduction chain.

After the 2007 crisis break out,except the influence of unemployment,A sharp decline in house prices affected the wealth of people and repaying the loan.

It consist another main factor of crashing US consumption.

In the meanwhile,even though real estate investment is just a small part of GDP,but its sharp decline also has a greater direct drag on the economy.

In all,personal consumption decides the American economic trend.