Friday, August 26, 2011

US economy: Output revised down for April to June

Shoppers in New York US consumer spending remains weak
The US economy grew less than first estimated in the second quarter of 2011, revised figures have shown.
The Commerce Department now says the economy expanded at an annualised rate of 1% between April and March, down from its first estimate of 1.3%.
Its downward revision will increase pressure on both the US government and the Federal Reserve to do more to boost the economy.
Fed Chairman Ben Bernanke is giving a keynote speech later.
Lower exports On a non-annualised basis, the US economy grew only 0.2% in the quarter, down from the previous estimate of 0.3%.
The lower growth figures comes as US consumer spending remains weak in the face of high unemployment and higher energy bills.
In the first quarter of 2011 the US economy expanded just an annualised 0.4%.
The downward revision for the second quarter came as the Commerce Department said exports only grew 3.1%, down from its first estimate of 6%.

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The question is, are we looking at a fourth quarter recovery?”
Paul Ballew Nationwide Insurance
However, it said consumer spending was stronger than first calculated, expanding 0.4% instead of 0.1%.
Even at 0.4%, though, the rise in consumer spending was still the weakest since the last quarter of 2009.
"Consumption still barely had a pulse," said Tom Porcelli, chief US economist at RBC Capital Markets.
Consumer spending is vital to the US, as it accounts for more than two thirds of its economy.
Business spending was revised up to 9.9% from 6.3%.
"We were expecting a bit of a downward revision, which reflects the headwinds on the recovery and all the factors we're trying to wrestle to the ground," said Paul Ballew, chief economist at Nationwide Insurance in Columbus, Ohio.
"We're expecting that things will be marginally stronger in the last part of the year. The question is, are we looking at a fourth quarter recovery?"
Mr Bernanke is set to speak at the annual gathering of central bank bosses at Jackson Hole in Wyoming.
Analysts are looking for hints that the Federal Reserve could introduce new economic stimulus measures.
The Federal Reserve has already announced that it plans to keep US interest rates at the current low level of between 0 and 0.25% until the middle of 2013.
There is speculation that Mr Bernanke may pave the way for a third round of quantitative easing: injecting cash into the financial system to try to boost the economy.
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