American economy grows at 1.3% pace
Source: Agencies |
July 30, 2011, Saturday
|
Print Edition
Print Edition
THE US economy expanded at meager 1.3 percent annual rate in the spring after scarcely growing at all in the first three months of this year, the US Commerce Department said yesterday.
The combined growth for the first six months of this year was the weakest since the recession ended. The government revised the January-March figures to 0.4 percent growth - down from its previous estimate of 1.9 percent.
High gas prices and scant income gains have forced consumers to pull back sharply on spending in the spring.
"These numbers are extremely bad," said Nigel Gault, an economist at IHS Global Insight. "The momentum in the economy is clearly very weak."
The sharp slowdown means the economy will likely grow this year at a weaker pace than last year. Economists don't expect growth to pick up enough in the second half of the year to lower the unemployment rate, which rose to 9.2 percent last month.
Earlier this year, economists thought that a Social Security payroll tax cut would accelerate growth in 2011. But most of that money has gone to pay for higher gas prices. And employers have pulled back on hiring after seeing less spending by Americans.
Consumer spending was nearly flat this spring. It increased 0.1 percent, after 2.1 percent growth in the winter. Spending on manufactured goods such as autos and appliances fell 4.4 percent. Many auto dealers reported shortages of popular models after Japan's March 11 earthquake, cutting into auto sales.
Complicating the situation is the debt crisis in Washington. Regardless of how lawmakers resolve that crisis, their decision will likely slow growth in the short term.
The combined growth for the first six months of this year was the weakest since the recession ended. The government revised the January-March figures to 0.4 percent growth - down from its previous estimate of 1.9 percent.
High gas prices and scant income gains have forced consumers to pull back sharply on spending in the spring.
"These numbers are extremely bad," said Nigel Gault, an economist at IHS Global Insight. "The momentum in the economy is clearly very weak."
The sharp slowdown means the economy will likely grow this year at a weaker pace than last year. Economists don't expect growth to pick up enough in the second half of the year to lower the unemployment rate, which rose to 9.2 percent last month.
Earlier this year, economists thought that a Social Security payroll tax cut would accelerate growth in 2011. But most of that money has gone to pay for higher gas prices. And employers have pulled back on hiring after seeing less spending by Americans.
Consumer spending was nearly flat this spring. It increased 0.1 percent, after 2.1 percent growth in the winter. Spending on manufactured goods such as autos and appliances fell 4.4 percent. Many auto dealers reported shortages of popular models after Japan's March 11 earthquake, cutting into auto sales.
Complicating the situation is the debt crisis in Washington. Regardless of how lawmakers resolve that crisis, their decision will likely slow growth in the short term.
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