- guardian.co.uk,
- Thursday July 31 2008
- Article history
The US economy shrank at the end of 2007 for the first time in six years, according to official figures, leading analysts to speculate the world's largest economy may be in recession.
The commerce department revised its estimate for the fourth quarter to show gross domestic product contracted 0.2% - rather than growing 0.6% as it previously reported. It was the first three-month period in which GDP shrank since growth contracted by 1.4% in the third quarter of 2001 during the last official recession.
The department also reported that GDP grew at an annual rate of 1.9%, up from a revised-down 0.9% in the first quarter. This figure was lower than analysts' expectations of a 2.3% rise in second-quarter growth.
Paul Ashworth, senior US economist at Capital Economics, said: "At first glance, the 1.9% annualised gain in US GDP in Q2 would seem to make a mockery of claims that the economy is in recession. However, given that the Treasury pumped in $91bn (£45bn), or nearly 4% at an annualised pace, in the form of tax rebates during the quarter, the actual outturn is pretty disappointing. It was also below the consensus forecast of a 2.3% gain.
"Moreover, GDP growth in the preceding two quarters was revised down. In particular, the economy is now estimated to have contracted by 0.2% in Q4 of last year, raising the possibility that the National Bureau of Economic Research (NBER) will eventually conclude that the recession began some time during the final three months of 2007."
Recession is popularly defined as at least two quarters of negative economic growth but the US has its own method of assessment, with the NBER's business cycle-dating committee making a judgment.
Consumer spending, which accounts for two-thirds of the US economy, rose 1.5% in the second quarter of the year, up from 0.9% in the first quarter and 1% in the fourth quarter last year.
The department noted that personal incomes had risen more sharply in the second quarter and attributed it primarily to the stimulus payments that the government was issuing to qualifying consumers.
Activity in the construction sector is still plummeting at a double-digit rate. Spending on home building contracted at a 15.6% annual rate in the second quarter, down from rates of 25.1% in the first quarter and 27% in last year's fourth quarter.
In other data released today, the US labour department said the number of workers filing claims for new jobless benefits jumped 44,000 last week. Initial claims for state unemployment insurance benefits rose to a seasonally adjusted 448,000 last week from a revised 404,000 the week before, and the highest reading since April 2003.
- guardian.co.uk © Guardian News and Media Limited 2008
No comments:
Post a Comment