Sharp tail-off in US economic growth
By Jeannine Aversa |
October 1, 2010, Friday
|
Print Edition
Print Edition
ECONOMIC growth in the United States tailed off sharply in the spring and probably isn't faring any better now.
Gross domestic product - the broadest measure of the economy's health - expanded at a feeble 1.7 percent annual rate in the April-June quarter, the US Commerce Department said yesterday.
That's a notch higher than the 1.6 percent growth rate the government estimated a month ago. The slight change was mostly due to a little more spending by consumers than estimated.
The second-quarter estimate is a sharp slowdown from a 3.7 percent growth rate logged in the first quarter.
Most economists expect growth to be similarly weak in the July-September quarter, with estimates ranging between 1.5 percent and 2 percent. The government's first report on third-quarter GDP will be released October 29. Unemployment - now at 9.6 percent - is expected to stay high or even rise in the coming months.
Americans aren't spending enough to give companies the kind of confidence in the economy that leads to rapid hiring.
Consumers did boost their spending in the second quarter at a 2.2 percent pace. It was a tad better than the government's previous estimate of 2.0. But it is still considered lackluster for this point in the recovery by historical standards. Economists think consumers will spend at a slower pace for the rest of the year.
Consumer spending is important because it accounts for roughly 70 percent of economic activity.
In the second quarter, Americans saved 5.9 percent of their disposable income, the most in a year. Before the recession, they saved just 2.1 percent.
The economy is the top issue heading into the congressional midterm elections. Voter backlash could cause Democrats to lose control of Congress.
GDP measures the value of all goods and services produced in the US.
The sharp drop off in the second quarter mainly reflected fallout from a bigger trade deficit. A surge in imported goods swamped growth in US exports to other countries.
The bigger trade gap that resulted shaved 3.5 percentage points from second-quarter growth, the most since 1947.
Gross domestic product - the broadest measure of the economy's health - expanded at a feeble 1.7 percent annual rate in the April-June quarter, the US Commerce Department said yesterday.
That's a notch higher than the 1.6 percent growth rate the government estimated a month ago. The slight change was mostly due to a little more spending by consumers than estimated.
The second-quarter estimate is a sharp slowdown from a 3.7 percent growth rate logged in the first quarter.
Most economists expect growth to be similarly weak in the July-September quarter, with estimates ranging between 1.5 percent and 2 percent. The government's first report on third-quarter GDP will be released October 29. Unemployment - now at 9.6 percent - is expected to stay high or even rise in the coming months.
Americans aren't spending enough to give companies the kind of confidence in the economy that leads to rapid hiring.
Consumers did boost their spending in the second quarter at a 2.2 percent pace. It was a tad better than the government's previous estimate of 2.0. But it is still considered lackluster for this point in the recovery by historical standards. Economists think consumers will spend at a slower pace for the rest of the year.
Consumer spending is important because it accounts for roughly 70 percent of economic activity.
In the second quarter, Americans saved 5.9 percent of their disposable income, the most in a year. Before the recession, they saved just 2.1 percent.
The economy is the top issue heading into the congressional midterm elections. Voter backlash could cause Democrats to lose control of Congress.
GDP measures the value of all goods and services produced in the US.
The sharp drop off in the second quarter mainly reflected fallout from a bigger trade deficit. A surge in imported goods swamped growth in US exports to other countries.
The bigger trade gap that resulted shaved 3.5 percentage points from second-quarter growth, the most since 1947.
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