View Full Version : Economic Growth Withers.

05-01-2012, 07:29 AM
Hows that Hope & Change working for you?

<span style='font-size: 20pt'>US economic recovery hits roadblock
<span style='font-size: 17pt'>Growth slows to 2.2% in first quarter after modest increase in consumer spending</span>


Washington: US consumers boosted spending only modestly in March and a gauge of Midwestern business activity fell sharply in April, suggesting the economy entered the second quarter with less steam.

The Commerce Department yesterday said consumer spending rose 0.3 per cent in March, just below the median forecast in a Reuters poll.

When taking into account inflation, which has been fed in recent months by higher gasoline prices, spending barely rose, advancing just 0.1 per cent.

"The spending number is an indication that the higher gas prices we saw last month are taking their toll," said Todd Schoenberger, managing principal at the Black Bay Group in New York.

The Commerce Department report also showed consumer income rose 0.4 per cent in March. Analysts had expected a gain of 0.3 per cent. After-tax income climbed 0.2 per cent in March when accounting for higher prices.

US government debt prices rose as anxiety over economic weakness in Europe and slowing growth in the United States led investors to favour lower-risk investments. US stocks edged lower.

US economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a slower pace. The economy grew at a 2.2 per cent annual pace in the first three months of the year, data on Friday showed, a slowdown from the fourth quarter's 3 per cent rate.

Stronger consumer spending over the entire quarter cushioned the blow, but yesterday's data suggested consumers ended the quarter spending less freely.

Cooling activity

A separate report from the private Institute for Supply Management-Chicago showed business activity cooled much more than expected in the Midwest during April. The ISM index for the Midwest fell to 56.2, its lowest since November 2009.

The reading follows several other regional business surveys that have suggested the economy started the second quarter on a soft note.

"The economy is losing a little momentum but manufacturing is still expanding," said Gary Thayer, a macro strategist at Wells Fargo Advisors in St Louis.

Another survey showed US small business hiring slowed considerably in the April and employees saw a reduction in their hours, adding to signs of weakening in labour market conditions. Businesses added 40,000 new jobs, a step back from the 75,000 positions created in March, according to Intuit, a payrolls processing firm.