You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Economy

  • US consumer prices unchanged in October
    U.S. consumer prices were unchanged in October as a fourth straight decline in gasoline costs helped to keep inflation at bay.
  • US unemployment aid applications fall to 291,000
    The number of people applying for U.S. unemployment benefits declined slightly last week, suggesting that job gains should remain solid.
  • G-20 leaders agree on $2 trillion boost to growth
    Under pressure to jolt the lethargic world economy back to life, leaders of G-20 nations on Sunday finalized a plan to boost global GDP by more than $2 trillion over five years. The fanfare, however, was overshadowed by tensions between Russian
Advertisement

Economy grows at 2.5% in spring

Analysts worry of slowdown in current quarter

– The U.S. economy grew at a 2.5 percent annual rate from April through June, an improvement from the first three months of the year. But economists are worried that growth may now be slowing.

The Commerce Department said Thursday that its final look at economic growth in the spring was unchanged from a prior estimate made last month.

However, the components of growth were altered slightly.

Businesses added a bit less to their stockpiles and exports did not grow as fast as thought. These downward revisions were balanced by slightly stronger spending by state and local governments.

Many analysts believe growth is slowing to a sluggish rate at or below 2 percent in the current quarter. Economists had initially hoped growth would improve in the second half of the year.

If economists are correct that economic activity slowed this summer, it would mark the third quarter in the last four that growth rates have been 2 percent or lower. Growth in the fourth quarter of 2012 was barely discernible 0.1 percent rate and then improved slightly to 1.1 percent growth in the January-March quarter.

The government initially estimated activity in the April-June quarter at a lackluster 1.7 percent but a big narrowing of the trade deficit reflecting stronger export sales overseas helped boost growth to 2.5 percent in the government’s second look.

The 2.5 percent figure held steady in the government’s third and final look at the gross domestic product for the spring quarter. The GDP is the economy’s total output of goods and services.

Economists had initially thought that growth would accelerate in the second half of the year behind steady hiring and fading effect from government spending cuts and higher taxes.

But early activity for the quarter has been discouraging. Consumers spent more cautiously in July as their income barely increased. The government spending cuts have weighed on defense spending and business investment. And higher mortgage rates now threaten to slow a housing recovery that had been a solid contributor to growth in the first half of the year.

Even the job gains from earlier in the year appear to be slowing. Employers have added an average of just 155,000 jobs a month since April.

Some economists worry that growth remains too weak to accelerate hiring, boost pay and encourage Americans to spend more. Consumer spending drives roughly 70 percent of economic activity.

Advertisement