Decrease the Rate of Economic Growth in the U.S.
U.S. economic activity January-March grew at a slower rate between October and December but still half the country completed the most robust since the end of the recession in July 2009, according to official data.
The Department of Commerce, the first of three estimates of gross domestic product (GDP) indicated an annualized growth rate of 2.2% in the first quarter, half a percentage point below the growth rate in the previous three months .
The data discouraged markets, where most analysts expected the rate of increase in GDP would have been between 2.5% and 2.7%.
The slowdown, coupled with recent indicators point to a weakening labor market and manufacturing activity, adding to concerns that the economy, which in July 2009 out of its recession deeper and longer in nearly eight decades, re- to stagnate.
But today’s report, the government corrected twice, shows a very positive: the spending of consumers in the U.S. equivalent to almost 70% of GDP, grew by 2.9% between January and March, the biggest increase since the fourth quarter of 2010.
It is a fact that should be taken with caution since the price index in consumption expenditure (a measure of inflation which pays close attention to the Federal Reserve) rose by 2.4% between January and March, after an increase of 1 , 2% in the previous quarter.
If you are still accelerating price increases, particularly fuel, consumers will not be much money available to go to stores with the enthusiasm that the economy needs.
The Federal Reserve has set a 2% inflation target by the end of this year and end 2012 estimated between 1.9% and 2%, according to estimates updated this week.
Federal Reserve also raised slightly its forecast for 2012 and said that inflationary pressures “will be moderating over the year,” so it left its policy of low interest rates.
At the conclusion of the meeting of the Open Market Committee, the U.S. central bank insisted Tuesday that the economy is expanding “at a moderate pace” and reiterated his intention not to raise interest rates, now below 0.25%, at least until 2014.
Yes that modified upward its forecast for GDP growth this year, which now stood between 2.4 and 2.9%, two tenths of a percentage point more than the projection made in January.
The reserve also improved forecasts of unemployment, estimated for the end of the year between 7.8 and 8%, a more optimistic projection than in January, expected an unemployment rate of 8.2 to 8.5 %.
One factor that slowed the growth of GDP between January and March was down 3% in government spending, following a 4.2% in the last quarter of 2011.
The slower growth rate in the first quarter, “primarily reflected a deceleration of investment in private sector inventories and a drop in nonresidential fixed investment,” a category that includes spending on structures, computers and industrial equipment, said Commerce Department reported.
After last summer (northern hemisphere), the efforts of companies to replenish their inventories accounted for more than half of total GDP growth in the fourth quarter last year. But between January and March replenishing inventories grew more slowly and contributed only a quarter of the total increase of GDP.
U.S. exports, which had grown at an annual rate of 2.7% between October and December grew at a 5.4% between January and March, refuting the warnings of those who feared a drop in demand for problems in Europe and the slower growth in Asia.
Category: Business News
