Economic growth comprises developments in labor, housing, Manufacturing, service and consumer sectors. These sectors fluctuate in response to business cycles hence causing gyrations in GDP (gross domestic product). Some sectors grow and some lag behind. After housing sector bust contribution from this sector to GDP has been negative to lower. Again changes in each sector are monitored by sector specific indicators. Housing starts, existing home sales etc give an indication of expected growth in economy. Economic growth is most important to every human being that demands resources from another human being or institution.
Economic growth in each country exerts pressure on goods demand and supply. This pressure flows through international channels of goods and cash (credit). Demand and supply concerns determine the price of goods like OIL/GOLD/COPPER etc in global capital markets. Cash (credit) pricing is done similarly. In today’s world Goods, cash (credit) and growth are intertwined in such a way that change in each sector has reflexive effect on other market. Central banks and governments play role in directing economic growth through their policies by becoming a visible hand in regulating the welfare of society. Welfare of society is achieved by invisible hand that regulates responses of human beings to most optimal state and this is nothing but technology or innovation or financial crisis.
Why is credit important? Global economy is driven by buying assets today and paying for tomorrow. This can happen only when some have cash to lend and some are willing to borrow. US GDP in first decade of 21st century is driven by credit related purchases. People here owe everything to credit.
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