US cuts may harm economic recovery
By Jeannine Aversa |
February 26, 2011, Saturday
|
Print Edition
Print Edition
DEEPER spending cuts by state and local governments weighed down American economic growth in the final three months of last year. The government's revised estimate for the October-December quarter illustrates how growing state budget crises could hold back the economic recovery.
The US Commerce Department reported yesterday that economic growth increased at an annual rate of 2.8 percent in the final quarter of last year. That was down from the initial estimate of 3.2 percent.
State and local governments, wrestling with budget shortfalls, cut spending at a 2.4 percent pace - much deeper than the 0.9 percent annualized cut first estimated and was the most since the start of 2010.
Consumers spent a little less than first thought. Their spending rose at a rate of 4.1 percent, slightly smaller than the initial estimate of 4.4 percent. Still, it was the best showing since 2006. And it suggests Americans will play a larger role this year in helping the economy grow, especially with more money from a social security tax cut.
Overall economic growth in the October-December quarter was slightly better than the 2.6 percent pace logged in the prior quarter. But it shows the economy steadily growing after a difficult patch last spring.
For all of last year, the economy grew 2.8 percent, the most in five years, according to revised figures. That was down from the 2.9 percent growth first estimated a month ago. However, it was an improvement on 2009 when the economy suffered its worst decline in more than 60 years.
Looking ahead, the US economy is expected to grow by 3.2 percent this year, -according to an AP Economy Survey.
The US Commerce Department reported yesterday that economic growth increased at an annual rate of 2.8 percent in the final quarter of last year. That was down from the initial estimate of 3.2 percent.
State and local governments, wrestling with budget shortfalls, cut spending at a 2.4 percent pace - much deeper than the 0.9 percent annualized cut first estimated and was the most since the start of 2010.
Consumers spent a little less than first thought. Their spending rose at a rate of 4.1 percent, slightly smaller than the initial estimate of 4.4 percent. Still, it was the best showing since 2006. And it suggests Americans will play a larger role this year in helping the economy grow, especially with more money from a social security tax cut.
Overall economic growth in the October-December quarter was slightly better than the 2.6 percent pace logged in the prior quarter. But it shows the economy steadily growing after a difficult patch last spring.
For all of last year, the economy grew 2.8 percent, the most in five years, according to revised figures. That was down from the 2.9 percent growth first estimated a month ago. However, it was an improvement on 2009 when the economy suffered its worst decline in more than 60 years.
Looking ahead, the US economy is expected to grow by 3.2 percent this year, -according to an AP Economy Survey.
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