US economy grows, but …
It falls short of 2.3 per cent forecast
WASHINGTON - The United States economy expanded at an annualised 1.9 per cent pace in the second quarter of the year, marking an improvement from the previous quarter, the Commerce Department said yesterday.
US economic momentum picked up from a revised 0.9 per cent rate for the first three months of the year, but the second-quarter growth fell short of the 2.3 per cent forecast by most economists.
Analysts said a giant economic stimulus, worth around US$168 billion ($229 billion), had helped boost growth. Helping consumers fight off high oil prices were government payments, handed out as tax rebates from late April to July. But analysts think the salutary effects of the stimulus payments will soon fade, erasing the support to the economy that had been provided during the second quarter.
The survey on the health of America’s US$14-trillion economy showed that second-quarter growth was the strongest since the third quarter of last year.
The government also revised downwards growth for the first quarter of this year and the last quarter of 2007. Fourth-quarter growth was revised significantly lower to show a drop of 0.2 per cent from a prior estimate showing a gain of 0.6 per cent.
The decline in gross domestic product during the fourth quarter marked the first time US economic growth slipped into negative territory since the recession of 2001.
Some economists and investors believe the world’s largest economy has slipped into a recession, but the second-quarter data will reassure those who think the economy will avoid a recession.
Economic growth has slowed of late amid a lengthy housing market slump and as a credit crunch grips the banking industry. Soaring world oil prices have also dented economic momentum.
Consumer spending rose 1.5 per cent during the second quarter against a 0.9 per cent gain in the previous quarter despite Americans cutting back on their purchases of big-ticket durable goods such as cars and white goods.
The Commerce Department report also showed that a surge in exports had helped fire up growth during the second quarter. Export growth accelerated sharply during the quarter, as exports boomed 9.2 per cent during the April-June period after rising 5.1 per cent in the first quarter, helped by the weak US dollar. Agencies
Source : Today - 1 Aug 2008
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