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Thursday, January 27, 2022

A Jump in the Prices of Houses as American Businesses Slow Down

As service industries have gone into retreat, business activity in the USA has cooled down considerably this month. But this points towards a momentum loss that the economy is facing currently. To sum it up, the situation can get quite reprehensible with COVID still hanging around, and the third quarter coming to a close. 

IHS Markit, a data firm, commented that the US Composite PMI Output Index that it has created slipped to a 54.4 reading after 54.6 the previous month. This Index has been created to track the services and manufacturing sectors- to ensure that the business activity prevails even in the face of such adversity. As far as the Index goes, any reading over 50 is indicative of a spurt in the growth in the private sector. Yet, a dip in the Index is suggesting that there is an ebb in the economic momentum considering the fiscal stimulus boost keeps on fading. 

Despair as Business Activity Comes to a Halt in the Face of a Pandemic

business activity
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In much better news, the Gross Domestic Product might actually rebound to as much as 32% annualized rate in this quarter. This would be a good growth considering the previous GDP rate, which was a measly 31.7% back in April-June. Several reports state that this was the worst performance since 1947. Unfortunately, the prevailing Coronavirus crisis has completely negated the economic growth of the last five years. Precisely why most of the policymakers and economists are clamoring for yet another aid package that would help balance the situation until business activity expands. Goes without saying, it has become quite paramount with the economy already seeping in recession once in February. 

Chris Williamson, IHS Markit’s Chief Business Economist, states that the main question now is to wonder if the strong display by the economy right now will sustain itself through the end of the year. The business activity will also undergo considerable stress due the Presidential Election on the third of November. It can be estimated that the economy will go down, due to business activities slowing even further- for most businesses would be awaiting the results of the elections before settling on any particular direction. 

IHS Markit also conducted a separate survey which highlighted that even markets in Europe had suffered deficits in its business activity. Most of the business growth in the Euro zone took a turn for the worse as a renewed downturn emerged in the services sector. 

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It’s been six months since the USA came under the coronavirus crisis, and the number of cases keeps increasing every single day. As of today, the death toll has risen above 200,000- the highest amongst all nations. 

Strong Housing Market in the Wake of Diminished Business Activity

Interestingly, as the entire economy is slowly tumbling down, the business activity in the housing market sector keeps pressing onwards. As it is getting driven by mortgage rates which are historically low, they are attracting consumers who want to reside in increased accommodations-for they are working from home. Unfortunately, the increase in demand hasn’t been balanced out with a large supply- therefore the prices for houses have inflated considerably. 

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With the situation progressing in this state, it would be hard to determine what the economy would be by the end of the year- considering most of the business activity would be on the low end of the scale. Until the Elections get over, the economy runs a major risk of falling even lower. 

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