Although the decline in U.S. gross domestic product for the first quarter temporarily spooked Wall Street, economists and analysts are saying economic conditions will improve in the second half of the year.
The forecast for GDP for the year is for a 2.5 to 4 percent gain. The broad range in estimates has a lot to do with one factor: the consumer. Since about 70 percent of GDP is driven by spending on consumer goods and services, the growth depends on people spending money at retail, restaurants and resorts, and on big-ticket items such as cars, houses and appliances. They also have to spend money for services on cars, homes and themselves — such as gym memberships and spa treatments.
A strong job market and cheap gas is expected to bolster spending, but even as consumers earn more money, they are saving more of it, too. When they do spend, it’s more often on vacations and dining out instead of on apparel and related goods.
The U.S. economy is set to swell to more than $20 trillion in the next decade. But its rate of growth will be dwarfed by China, which is expected to surpass the U.S. by 2030 with a GDP of more than $31 trillion.