Economy Faces Challenges with Slower Growth
The economic recovery won't be catching fire any time soon.
Businesses and governments are likely to reduce spending in the second half of the year. Consumers, who drive most economic growth, aren't expected to take up the slack.
The Commerce Department said Friday that the economy grew at an annual rate of 2.7 percent in the first quarter, offering its third and final estimate for the period. It was slower than initially thought because consumers spent less and imports rose faster that previously calculated.
U.S. Economic Growth Up 2.7%, Less Than Expected
Economists anticipate even slower growth ahead as companies bring their stockpiles more in line with sales. Factory output has climbed this year. But it was driven more by businesses replenishing their warehouses after the recession and less by consumer demand.
"The economy is growing, but still at a disappointingly slow pace," said Zach Pandl, an economist at Nomura Securities. Take away businesses restocking their inventories and "you still have a lukewarm recovery," he said.
Other factors could hold back growth. Federal government stimulus spending is expected to fade. The European debt crisis could slow U.S. exports and world trade. And state and local governments are likely to rein in spending and raise taxes as they struggle to close budget gaps.
"This is still the weakest and longest economic recovery in U.S. postwar history," said Paul Dales, U.S. economist with Capital Economics.
High unemployment and tight credit have kept consumers from ramping up their spending as in past recoveries. The housing industry has played a big role after previous recessions. But this time it is slumping and subtracting from economic growth.
Most economists expect the unemployment rate, currently at 9.7 percent, to remain above 9 percent through the end of the year.
The economy has grown for three consecutive quarters after shrinking for four straight during the recession - the longest contraction since World War II.
In normal times, 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 percent to 9 percent for five straight quarters.
The department's report is the third of three estimates it makes for each quarter's GDP, the broadest measure of the nation's economic output. Friday's figure is below last month's 3 percent estimate of first quarter growth. The rate declined from earlier reports because consumers spent less than previously estimated, while the nation imported more goods from overseas.
The government updates the figures with new information that is released after the initial reports.
Consumer spending rose by 3 percent, almost double the pace of the previous quarter. That's below the previous month's estimate of a 3.5 percent increase. Businesses ratcheted up their spending on equipment and software by 11.4 percent.
Growth of roughly 3 percent is needed just to generate enough jobs to keep up with increasing population. Many economists say growth needs to reach 5 percent for a full year to lower the jobless rate, by one percentage point.
In the past three quarters, growth has averaged 3.5 percent.
GDP measures the value of all goods and services produced in the United States and is considered the best measure of the country's economic health.
© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Businesses and governments are likely to reduce spending in the second half of the year. Consumers, who drive most economic growth, aren't expected to take up the slack.
The Commerce Department said Friday that the economy grew at an annual rate of 2.7 percent in the first quarter, offering its third and final estimate for the period. It was slower than initially thought because consumers spent less and imports rose faster that previously calculated.
U.S. Economic Growth Up 2.7%, Less Than Expected
Economists anticipate even slower growth ahead as companies bring their stockpiles more in line with sales. Factory output has climbed this year. But it was driven more by businesses replenishing their warehouses after the recession and less by consumer demand.
"The economy is growing, but still at a disappointingly slow pace," said Zach Pandl, an economist at Nomura Securities. Take away businesses restocking their inventories and "you still have a lukewarm recovery," he said.
Other factors could hold back growth. Federal government stimulus spending is expected to fade. The European debt crisis could slow U.S. exports and world trade. And state and local governments are likely to rein in spending and raise taxes as they struggle to close budget gaps.
"This is still the weakest and longest economic recovery in U.S. postwar history," said Paul Dales, U.S. economist with Capital Economics.
High unemployment and tight credit have kept consumers from ramping up their spending as in past recoveries. The housing industry has played a big role after previous recessions. But this time it is slumping and subtracting from economic growth.
Most economists expect the unemployment rate, currently at 9.7 percent, to remain above 9 percent through the end of the year.
The economy has grown for three consecutive quarters after shrinking for four straight during the recession - the longest contraction since World War II.
In normal times, 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 percent to 9 percent for five straight quarters.
The department's report is the third of three estimates it makes for each quarter's GDP, the broadest measure of the nation's economic output. Friday's figure is below last month's 3 percent estimate of first quarter growth. The rate declined from earlier reports because consumers spent less than previously estimated, while the nation imported more goods from overseas.
The government updates the figures with new information that is released after the initial reports.
Consumer spending rose by 3 percent, almost double the pace of the previous quarter. That's below the previous month's estimate of a 3.5 percent increase. Businesses ratcheted up their spending on equipment and software by 11.4 percent.
Growth of roughly 3 percent is needed just to generate enough jobs to keep up with increasing population. Many economists say growth needs to reach 5 percent for a full year to lower the jobless rate, by one percentage point.
In the past three quarters, growth has averaged 3.5 percent.
GDP measures the value of all goods and services produced in the United States and is considered the best measure of the country's economic health.
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.Last month, I visited my wife's home town in the midwest.
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The factory where her father worked his entire adult life... Where they made munitions during world war 2 and spark plugs during peacetime? -- Closed... (Most of our sparkplus now come from Ningbo TBG group in red china.)
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Johnson Controls ranks as Wisconsin's biggest corporation and 58th on the Fortune 500 list. It earned $979 million in profit in 2009, despite the steep downturn, and shelled out $12,924,421 to CEO Stephen Roell.
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After turning a $297 million profit in the first quarter of 2010, the firm is planning to build 10 new plants in red china this year to the 30 already operting there. The Johnson Controls empire also stretches down to Mexico, where it has relocated far more jobs than what remains in its home town.
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Wages at the Johnson Controls Reynosa (Mexico) plant start at 72 cents an hour, "far below what most people would considerable a sustainable wage for the workers and their families," as Father John Cielichowski explained at a Johnson Controls stockholders meeting.
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Not surprisingly, the stockholders were distinctly unmoved by the plight of either the discarded workers in Milwaukee or the new crop of ruthlessly-exploited workers in Mexico.
Did anyone else besides me scream out "FAT CHANCE!" at the prospect of "governments likely to reduce spending"?!? C'mon!
Overwhelm the system
Barach Obama is no fool. He is not incompetent. To the contrary. He knows exactly what he's doing. He is purposely overwhelming the U.S. economy to create systemic failure, economic crisis and social chaos -- thereby destroying capitalism and our country from within.
Barack Obama (Columbia University, class of '83). Obama is following the plan of Cloward & Piven, two professors at Columbia University. They outlined a plan to socialize America by overwhelming the system with government spending and entitlement demands. Add up the clues below. Taken individually they're alarming. Taken as a whole, it is a brilliant, Machiavellian game plan to turn the United States into a socialist/Marxist state with a permanent majority that desperately needs government for survival ... and can be counted on to always vote for bigger government. Why not? They have no responsibility to pay for it.
-- Universal health care. The health care bill had very little to do with health care.? It had everything to do with unionizing millions of hospital and health care workers, as well as adding 15,000 to 20,000 new IRS agents (who will join government employee unions). Obama doesn't care that giving free health care to 30 million Americans will add trillions to the national debt. What he does care about is that it cements the dependence of those 30 million voters to Democrats and big government. Who but a socialist revolutionary would pass this reckless spending bill in the middle of a depression?
-- Cap and trade. Like health care legislation having nothing to do with health care, cap and trade has nothing to do with global warming. It has everything to do with redistribution of income, government control of the economy and a criminal payoff to Obama's biggest contributors. Those powerful and wealthy unions and contributors (like GE, which owns NBC, MSNBC and CNBC) can then be counted on to support everything Obama wants. They will kick-back hundreds of millions of dollars in contributions to Obama and the Democratic Party to keep them in power. The bonus is that all the new taxes on Americans with bigger cars, bigger homes and businesses helps Obama "spread the wealth around."
Medicare? social security?
President Obama has a solution to the Gulf oil spill: $7-a-gallon gas.
That's a Harvard University study's estimate of the per-gallon price of the president's global-warming agenda. And Obama made clear this week that this agenda is a part of his plan for addressing the Gulf mess.
I don't think Obama's $7-a-gallon gas is going to help.
ur an idiot.
"Plan B"...circumventing Congress, Obama regime moves to "unilaterally extend either deferred action or parole to millions of illegal aliens in the United States.