The New York Times used the word “tepid” to describe the June jobs report and “tepid” is again how it describes US economic growth in the second quarter. The US economy grew 1.5 percent for the last three months of 2012, according to figures released by the U.S. Department of Commerce’s Bureau of Economic Analysis. Analysts had predicted growth of 1.4 percent.
In comparison, in the first quarter of 2012, real domestic growth was 2.0 percent.
Wary consumers are cutting down on purchases and, with the ongoing European debt crisis and a global economic slowdown, business investments are declining. Bloomberg notes that both UPS and Proctor & Gamble have cut profit forecasts. Household consumption rose 1.5 percent from April through June, down from a 2.4 perent increase in the previous quarter.
Retail sales have fallen for a third consecutive month with stores including Target and Macy’s posting same-store sales that were lower than expected. Earlier this week, Apple’s profit was reported to be lower than expected, in part because customers, aware of buzz about a new iPhone, are not buying the current one.
Updated estimates of economic activity for 2009, 2010 and 2011 provided by the Commerce Department show that “the recession was less deep than it seemed in the most recent reports — though more pronounced than in initial readings — and, as a consequence, that the pace of recovery also appears somewhat slower.” Officials said that they had ”significantly underestimated” state and local government spending in 2009, for the mundane reason that they have only recently received more extensive data from state and local governments. Corporate profits and purchases had also been overestimated in 2010.
Federal Reserve Chairman Ben S. Bernanke has said that policy makers are “ready with more stimulus as needed,” as the slowdown in economic growth means it will be harder to lower unemployment.
With the most recent joblessness figures at 8.2 percent, the newest GDP data could complicate President Barack Obama’s reelection bid in November. Obama can be relieved that there is growth, albeit slow, notes one analyst, but the new figures show that things are not yet getting better.
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