Table of Contents
The renewed availability of credit to consumers and businesses has helped the recovery of the manufacturing sector in the US. Manufacturing output strongly rebounded from the 2008/2009 recession. Most of it has been driven by the good performance of durable goods. This could be a sign that the US is again becoming an attractive place to manufacture many products consumed within the country.
Features and benefits
* Describes the measures the Federal Reserve has taken to tackle the economic slowdown.
* Looks into the effects of quantitative easing (QE) on credit expansion to consumers and business.
* Analyzes the impact of macroeconomic policies on the manufacturing sector in the US.
In 2007, the burst of the housing bubble in the USA generated one of the worst recessions in the economic history of the country. During the same period, the US's GDP contracted by about $680bn. Due to a lack of demand and financing from private banks, manufacturing in the US contracted sharply.
In the aftermath of the crisis, credit to households dropped 6.13% between 2008 and 2011, reaching values of $13.8tn and $12tn, respectively. Due to a lack of demand coming from consumer spending, manufacturing suffered a contraction and entered a restructuring phase.
The impetus from quantitative easing (QE) pushed the numbers back to a positive trend. The volume of total credit lent to households expanded approximately 1% between 2011 and 2013, reaching $13tn in the last quarter of 2013. The consumer debt-fueled model is back in place, pushing up the level of manufacturing in the American economy.
Your key questions answered
* How has the Federal Reserve responded to the recent economic crisis?
* Has the monetary policy from the Federal Reserve(Fed) been effective in dragging the manufacturing sector out of recession?
* What is Quantitative Easing?
* How have macroeconomic policies impacted the US manufacturing sector and why?
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