US lowers estimate of GDP Q1 expansion
By Christopher S. Rugaber |
June 26, 2010, Saturday
|
Print Edition
Print Edition
THE government lowered its estimate of how much the United States economy grew in the first quarter of this year, noting that consumers spent less than it previously thought.
Gross domestic product rose by 2.7 percent in the January-March period, US Commerce Department said yesterday. That was less than the 3 percent estimate for the quarter that the government released last month. It was also much slower than the 5.6 percent pace in the previous quarter.
The economy has now grown for three consecutive quarters after shrinking for four straight during the recession -- the longest contraction since World War II.
In normal times, a 2.7 percent growth would be considered healthy. But it's relatively weak for a recovery after a steep recession. After the last sharp downturn in the early 1980s, GDP grew at rates of 7 to 9 percent for five straight quarters.
"It's what I call a halfhearted economic advance," said Stuart Hoffman, chief economist at PNC Financial Services Inc. The economy is likely to grow at a similarly modest pace for the rest of the year, he said. That's likely to cut the 9.7 percent jobless rate, but only to about 9.3 percent by the end of the year.
The European debt crisis is likely to slow world trade in the second half of the year and businesses may pull back on spending once they have rebuilt their inventories, said Paul Dales, US economist with Capital Economics.
"Overall, the US economy may be performing much better than those in Europe, but this is still the weakest and longest economic recovery in US postwar history," Dales said.
The report is the third of three estimates it makes for each quarter's GDP.
Gross domestic product rose by 2.7 percent in the January-March period, US Commerce Department said yesterday. That was less than the 3 percent estimate for the quarter that the government released last month. It was also much slower than the 5.6 percent pace in the previous quarter.
The economy has now grown for three consecutive quarters after shrinking for four straight during the recession -- the longest contraction since World War II.
In normal times, a 2.7 percent growth would be considered healthy. But it's relatively weak for a recovery after a steep recession. After the last sharp downturn in the early 1980s, GDP grew at rates of 7 to 9 percent for five straight quarters.
"It's what I call a halfhearted economic advance," said Stuart Hoffman, chief economist at PNC Financial Services Inc. The economy is likely to grow at a similarly modest pace for the rest of the year, he said. That's likely to cut the 9.7 percent jobless rate, but only to about 9.3 percent by the end of the year.
The European debt crisis is likely to slow world trade in the second half of the year and businesses may pull back on spending once they have rebuilt their inventories, said Paul Dales, US economist with Capital Economics.
"Overall, the US economy may be performing much better than those in Europe, but this is still the weakest and longest economic recovery in US postwar history," Dales said.
The report is the third of three estimates it makes for each quarter's GDP.
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