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World Bank: US Economic Growth Speeding Up

World Bank: US Economic Growth Speeding Up
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Many economists say U. S. growth will speed up a bit over the next year, which will likely make it easier for other nations to sell their products in the world’s biggest economy. Surging energy production is cutting costs and spurring U. S. economic growth, but rising interest rates are acting as brakes on expansion.

Some shops are busier, because for the first time in five years, the United States and other wealthy nations are shaking off the recession and making a larger contribution to global growth.

That is the word from a new World Bank report, which also says growth will be helped by fewer cuts in government spending over the next year.

The bank’s Manager of Global Macroeconomics is Andrew Burns.

“We are looking at a significant acceleration in the U. S. [economic growth] from about 1.8 percent last year to 2.8 percent this year," said Burns.

Key sectors of the U. S. economy, like housing, are strongly influenced by interest rates. Lower rates make it easier for families to borrow the money to buy homes and businesses to get the equipment they need to expand.

With that in mind, the U.S. central bank has been working hard to stimulate the economy by cutting interest rates. Part of that effort involves buying tens of billions of dollars of securities each month, a program that is being reduced or “tapered.”

If the stimulus continues for too long, it might spark inflation, which could hurt the economy. analyst Greg McBride says a slow increase in interest rates will not hurt, if the economy is expanding at the time.

"The likelihood is that long-term interest rates will probably grind slowly higher throughout 2014, while short-term interest rates remain unchanged," said McBride.

A surge in U.S. energy production will help overcome the impact of rising interest rates. Oil industry experts say growing use of hydraulic fracturing or “fracking” has sharply increased U. S. production of oil and natural gas.

The head of the American Petroleum Institute Jack Gerard, says the larger supply of natural gas means lower energy prices, and a boost for American manufacturers.

“If you want to put people to work, if you want to generate revenue, now is the time. We can do it through the energy equation," said Gerard.

The wider use of fracking is boosting U.S. oil production, cutting the cost of crude oil imports, and leaving consumers with more money to spend on other goods and services.

Critics say burning more fossil fuels may increase climate change and voice concerns about the impact of fracking on the environment and public health.

Industry spokesmen say the practice is safe, but opponents say some gas wells that use fracking technology have polluted nearby water wells, and they urge more scientific study.