| Questions remain over growth of the US economy |
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| World Affairs Talk | |
| Wednesday, 06 June 2007 | |
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The figure was actually below the 0.8 percent growth pace estimate by Wall Street analysts and came after a 2.5 percent expansion in the fourth quarter of 2006. The results were revealed after the authority went through a revision. The first-quarter growth in 2007 was held down by factors such as an inventory adjustment, weak net exports and a slowdown in defence spending. These seemed likely to be at least partially reversed in the coming term. The housing slump in the US has been a serious worry, creating fears that it could have a knock-on effect on other sectors of the economy. Although the growth pace slowed to a crawl in the first quarter, many economists and the Federal Reserve said, they expect growth to pick up over the course of 2007. The Federal Reserve said that inflation never the less remains its primary concern. The latest revision came as a result of a bigger-than-expected trade deficit, which meant more goods consumed in the US were produced abroad. Real estate remained the chief drag on economic growth, but the decline was a bit less than estimated; spending on residential investment fell 15.4 percent, instead of an earlier estimate of 17 percent. Consumer spending was the main driver of growth, increasing 4.4 percent, up from the earlier estimate of 3.8 percent. Business investment was better than earlier estimates, growing 2.9 percent, revised up from 2.0 percent. An inflation indicator linked to GDP showed a 3.3 percent gain in prices, down from an earlier estimate of 3.4 percent. Core prices, excluding food and energy, were up an unrevised 2.2 percent. These indicators will improve soon, believe the corporate CEOs. America’s top corporate executives foresee pretty good business prospects even as the economy makes its way through a sluggish spell. Most executives expected sales, capital investment and hiring to remain at current levels or be boosted in the coming months. US employers added 157,000 jobs only in May in a sign that the world's biggest economy is regaining vitality after the weakest. Share & Bookmark             |
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