NY Times July 27, 2012 U.S. Economy Slowed to a Tepid 1.5% Rate of Growth By SHAILA DEWAN
The United States economy grew by a tepid 1.5 percent annual rate in the second quarter, losing the momentum it had appeared to be gaining earlier this year, the government reported Friday. Growth was held back as consumers curbed purchases and business investment slowed in the face of a global slowdown and a stronger dollar. Analysts had expected a 1.4 percent rate. The sluggishness of the recovery makes the United States more vulnerable to trouble in Europe and increases the likelihood of more stimulus from the Federal Reserve, which has lowered its forecasts in recent weeks. It also illustrates the election-season challenge to President Obama, who must sell his economic record to voters as the recovery slows. In part, the economy subsided after an unseasonable spurt during the warm winter, and in part it followed the pattern of the past couple of years — one of hopes raised, then dashed by wary business owners and households trying to reduce their debt. In the first quarter, the economy grew 2 percent, according to the revised figures released Friday by the Commerce Department. Its previous estimate was 1.9 percent. “You can’t blame all of it on Europe — we have our own problems yet,” said Joshua Shapiro, the chief United States economist at MFR Inc., a financial consulting firm. “When you have a credit bubble or asset bubble that’s popped, the recovery process from that is just really long and really painful.” The Commerce Department also released updated estimates of economic activity for 2009, 2010 and 2011. Those figures showed that the recession was less deep than it seemed in the most recent reports — though more pronounced than in initial readings — and, as a consequence, that the pace of recovery also appears somewhat slower. The new estimates show that economic activity fell by 3.1 percent in 2009 and then rose by 2.4 percent in 2010. The government previously reported that activity fell by 3.5 percent in 2009 before rising 3 percent in 2010. The estimated pace of growth in 2011, 1.8 percent, remained basically unchanged. It was previously reported as 1.7 percent. The revisions, part of an annual process, reflect the imprecise nature of the agency’s work. Its initial estimates are derived from a mix of comprehensive data, samples and educated guesswork, and refined over time. In this case, officials said they had significantly underestimated spending by state and local governments in 2009, and overestimated corporate profits and purchases in 2010. The adjustments were largely offsetting. The agency now estimates average annual growth of 0.3 percent over the three-year period, rather than 0.4 percent. But the new numbers may modify public perception of two key economic trends. It appears that corporations rebounded more slowly from the recession than previously believed. And the more complete data used in the new estimates show state and local governments increased spending in 2009 before cutting back in the next two years. Officials said they did not have enough information to explain the previously unreported increase, except to say the money was not spent on personnel or on infrastructure projects, the two categories that might have benefited most directly from the federal government’s stimulus programs. Binyamin Appelbaum contributed reporting from Washington. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
