Aug 29, 2010

US economy grew 1.6% in the second quarter

The US economy grew 1.6% in the second quarter, revised down from a first estimate of 2.4%.The figures were better than most analysts had expected.

Recent data on the US economy had raised worries that the US was entering a double-dip recession, dragging the rest of the world with it.

The revised figure was mostly due to the largest surge in imports in 26 years, and a slower build-up of stocks by companies.

Economists had estimated the revision would be sharper for the April-to-June period, down to about 1.3%.

Nevertheless, it still marks a big drop on the growth figure for the previous three months, which stood at 3.7%.

The US economy has now grown for four straight quarters, although that annualised growth rate averaged only 2.9%.
Experts say that the economy needs to grow at about 3% just to keep the unemployment rate, currently 9.5%, from rising. Business investment in new machinery, computers and software drove much of the growth last quarter, increasing nearly 25%.

But much of that spending involved the purchase of imported goods. Imports surged 32.4%, the most since 1984. That was much larger than the 9.1% increase in exports.
However, the Commerce Department figures also showed that personal consumption by US consumers was higher than expected.
Their spending rose at a 2% annual rate, slightly higher than the first quarter's 1.9%.
In the past week, economic data has revealed deep concerns about the health of the US economy.Sales of new homes sank to the lowest levels in half a century, while the manufacturing sector cut back capital spending sharply.

On Friday, in a speech to central bankers, Ben Bernanke, chairman of the Federal Reserve, warned that the economic outlook was "inherently uncertain". The economy, he said, "remains vulnerable to unexpected developments".

He also said that the Fed was ready to pump more money into the economy, through another large-scale purchase of securities, if conditions were to deteriorate significantly.

The US economy emerged from recession with a 1.6% growth rate in the third quarter of 2009.

No comments:

Post a Comment