Entries in GDP (23)


US Economy Grew 0.1% During Last Three Months of 2012

Comstock Images/Thinkstock(WASHINGTON) -- The U.S. economy grew at an annual rate of 0.1 percent in the last three months of 2012, according to the second estimate released by the Commerce Department on Thursday, a reverse from the 0.1 percent decline reported in the advance estimate last month.

Though Thursday's estimate is based on a more complete source of data, the "general picture of the economy for the fourth quarter remains largely the same as what was presented last month," according to the Commerce Department's Bureau of Economic Analysis.

Personal consumption expenditures, nonresidential and residential fixed investments were some of the drivers of the GDP increase.  Imports also decreased.

The figure is still lower than the 0.5 percent increase many analysts had expected, according to Jim O'Sullivan, chief U.S. economist of High Frequency Economics.

"While not negative any more, the weakness in Q4 GDP still looks grossly exaggerated," Sullivan wrote in a note to investors.

Other data, such as employment growth and the ISM indexes, suggest that the growth is at least 2 percent, or "perhaps better than that," he wrote.

"To some extent, the weakness in Q4 was payback for what may have been exaggerated strength in Q3 -- which shows a 3.1 percent pace and 3.5 percent excluding a drought adjustment," according to Sullivan.

He expects some "payback" in the first quarter of this year, forecasting 3 percent growth during the first three months of this year.

Copyright 2013 ABC News Radio


Survey: US Economy Will Keep Growing in 2013

Comstock Images/Thinkstock(NEW YORK) -- The U.S. economy should continue to grow this year and into the next, according to the latest outlook from the National Association for Business Economics.

"The NABE panelists are showing greater optimism in that they expect real GDP (gross domestic product) to grow by 2.4 percent from the fourth quarter of '12 to the fourth quarter of '13 and to grow by 3 percent by 2014," says Dr. Nayantara Hensel, Chair of the NABE Outlook Survey Committee.

But the 49 economists surveyed are worried fiscal uncertainty could slow down an otherwise growing economy.

"About 95 percent of the panelists were particularly concerned that real GDP this year is likely to be negatively affected by the uncertainty surrounding the U.S. fiscal imbalances and the issues linked to the continuing resolution, sequestration and the debt ceiling," she says.

Meanwhile, the economic forecasters aren't so optimistic about what lies ahead for Europe's financial future.

"About a third of the panelists believe that Spain will require a larger bailout package in 2013 than was previously anticipated.  About a quarter of the panelists believe Italy will require a bailout package in 2013.  About a fifth of the panelists believe Ireland will require a second bailout package in 2013," says Hensel.

Copyright 2013 ABC News Radio


GDP Drops 0.1% in Fourth Quarter

Comstock Images/Thinkstock(NEW YORK) -- The U.S. economy shrank last quarter for the first time since 2009, surprising many experts who didn't expect to see a contraction.

According to Commerce Department figures released on Wednesday, gross domestic product, or GDP, decreased 0.1 percent in the fourth quarter.

"Most economists were anticipating a sharp slowdown between Q3 and Q4 but economists were not expecting a slowdown to the degree that actually pushed it into a contraction," Carl Riccadonna, the senior U.S. economist at Deutsche Bank, tells ABC News Radio.

He says the drop was largely due to one-time factors, like cuts in defense spending, fewer exports and slower inventory growth.

"Inventories alone subtracted about 1.3 percent off of the growth rate, then also, there was a sharp slowdown in government spending on defense and that subtracted another 1.3 percent," Riccadonna says.

But, as he notes, the contraction is not as bad as it looks.  There were pickups in consumer and business investment spending.

"If you look at that headline number, you say, 'Oh, contraction: Boy, we're on the cusp of recession,' but that's really a misleading story and as you look at the underlying details, it's still very much consistent with an economy that continues to regain its footing," Riccadonna says.

"This does still bode decently for economic output in the current quarter," he adds.

Copyright 2013 ABC News Radio


Third Quarter GDP Rises 2 Percent

Comstock Images/Thinkstock(WASHINGTON) -- The nation’s economy continued to expand in the third quarter, rising at an annualized rate of 2 percent, the Commerce Department said Friday morning.

The Gross Domestic Product numbers are preliminary and will be adjusted.  The third quarter compares with the previous period when the GDP rose at 1.3 percent.  It’s the first back-to-back quarters with a 2 percent or lower rate since the U.S. began emerging from recession in 2009.

Growth has been sporadic since the recession officially ended, but mostly hovering at the 2-3 percent level -- not enough, say economists, to bring down joblessness to where it was before the economic meltdown took full hold in 2007-2008.  After 43 straight months above 8 percent, the unemployment rate dropped to 7.8 percent last month.

Copyright 2012 ABC News Radio


Fed 2012 GDP Growth Forecast Worsens; Unemployment Forecast Unchanged

Chip Somodevilla/Getty Images(WASHINGTON) -- Among its announcements Thursday was the Fed’s prediction for unemployment, GDP growth and inflation rates.
The Federal Reserve still thinks unemployment won't fall below eight percent this year.  The unemployment rate is currently 8.1 percent.  But the central also says that next year the unemployment rate could fall to 7.6 percent and down to 6.7 percent in 2014.
Inflation, the Fed says, will likely remain at or below two percent for the next three years.
As for GDP, the Fed has changed its previous forecast to expect slower growth this year, but expects a somewhat better situation in coming years.
The Fed now expects growth to be no stronger than two percent this year. That's down from its forecast of 2.4 percent in June.  The Fed says growth will accelerate next year to as much as three percent, up from June's forecast of as much as 2.8 percent. For 2014, the Fed projected growth between three percent and 3.8 percent.
The Fed may be taking into account the effects of its newly announced QE3 on future growth in its new forecasts.  All this being said, predictions are generally risky business, let alone those looking as far out as 2014.
For those looking for further explanation on how QE3 might work:
The Fed wants to get money moving in the economy, which is stuck in many ways.
Until now, the Federal Reserve was buying up Treasury bonds.  This depresses the interest rate available on these bonds and prices of assets like stocks go up.  The hope then is that people find they are worth more (401(k)s go up) and businesses can borrow at lower rates.  People and businesses then spend more, boosting output and hiring.  This has worked to some extent in the past in the other two rounds of easing since the financial crisis began in late 2007.
The Fed has been criticized for buying Treasury bonds to finance the U.S. debt.  So perhaps to avoid that criticism the Fed is now buying mortgage-backed securities.
The intended effect is similar to buying Treasury bonds -- as the Fed says, to “put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”
Buying mortgage-backed securities could take these off banks’ books, possibly boosting lending and spending. Consumers may find it easier to refinance and buy new homes.  All of these things have a ripple effect on the economy.  As the economy grows, hiring grows.
By saying they may keep doing what they are doing until the ripple effect gets to the job market, the Fed is hoping to provide some certainty to employers and investors.
The gridlock in Washington makes the Fed one of the few entities able to do anything right now to help the economy. Thursday’s action is not expected to do much, but it’s one of the few moves available to policymakers.
Copyright 2012 ABC News Radio


US Economy Expanded at Weak 1.5% Pace in Second Quarter

Comstock Images/Thinkstock(WASHINGTON) -- The struggling economy grew at a 1.5 percent pace in the second quarter, the government reported on Friday, confirming a slowdown that has confounded politicians and forced companies to curtail hiring and investment.

The Commerce Department's release of its first advanced estimate of U.S. gross domestic product (GDP) in the second quarter was being closely watched by economists. The turmoil in Europe over the faltering euro and indebted governments has spilled over to the U.S., which is battling unemployment that has been over 8 percent since the recession of 2007-08.

"The GDP numbers for this quarter are somewhat disappointing because, at this point in a normal recovery cycle, we would want the real GDP number at consistently more than 3 percent," said Brian Hamilton, CEO of Sageworks and a leading expert on privately held companies. "The GDP numbers are a little surprising given that our data continues to show strong growth in private company revenue.  It looks as if government sector growth and growth in imports are dragging down GDP. Until GDP is consistently over 3 percent, our fear is that job growth will not be significant."

This is the slowest recovery from a recession since at least 1960. The economy, which must grow at a 4 percent annualized pace or better to bring unemployment down, has been the number one topic in the upcoming presidential election.

Real GDP, the output of goods and services produced in the U.S., for this quarter will have a number of uncertainties, said Scott Brown, chief economist with investment firm Raymond James.

"It's the advanced estimate so the government doesn't have all the pieces of the puzzle," Brown said, such as estimates about foreign trade. "Very often we will see very large revisions later."

Economists expected a consensus 1.2 percent growth in the second quarter, as reported by Bloomberg, compared with 1.9 percent growth in the first quarter.

Copyright 2012 ABC News Radio


Mortgage Rates: Another Record Low

Zoonar/Thinkstock(WASHINGTON) -- Average fixed mortgage rates continued to fall to all-time record lows amid stalled consumer spending and manufacturing activity, government-sponsored Freddie Mac reported today.

The 30-year fixed-rate mortgage averaged 3.62 percent for the week ending July 5, down from last week’s 3.66 percent. Last year, at this time it was 4.6 percent.

The 15-year fixed-rate mortgage averaged 2.89 percent, down from last week when it was 2.94 percent. Last year, the 15-year mortgage rate was 3.75 percent.

“Recent economic data releases of less consumer spending and a contraction in the manufacturing industry drove long-term Treasury bond yields lower over the week and allowed fixed mortgage rates to hit new all-time record lows,” said Frank Nothaft, Freddie Mac vice president and chief economist.

In the final first quarter estimates for GDP, growth in personal expenditures was revised downward to an annualized rate of 2.5 percent. Monthly consumer spending in April was revised to 0.1 percent from a 0.3 percent gain and was unchanged in May.

The Institute for Supply Management reported that manufacturing shrank in June, the first decline since July 2009.

Copyright 2012 ABC News Radio


White House Responds to Worse than Expected GDP Figure

iStockphoto/Thinkstock(WASHINGTON) -- The White House says the continued expansion of the economy is “encouraging” but that the slower-than-expected growth in the first quarter shows “additional growth is needed” to replace the jobs lost in the recession.

Reacting to the news that GDP grew at a rate of 2.2 percent in the first quarter of 2012, Chairman of the Council of Economic Advisers Alan Krueger noted in a White House blog Friday that “overall GDP growth was weighed down by reduced spending in the government sector.”

“According to the Bureau of Economic Analysis, national defense expenditures fell by 8.1 percent in the first quarter.  Government spending across all levels subtracted 0.6 percentage point from overall GDP growth.  The latest report continues a pattern of moderate growth in the private sector components of GDP and contraction of the government components of GDP,” he wrote.

Asked if the White House is concerned about the slowing of the economic recovery, Deputy Press Secretary Josh Earnest told reporters aboard Air Force One on Friday, “We don’t put too much weight on any individual report.”

“While we’re moving in the right direction, this report illustrates something that the president has long understood, which is that there’s quite a bit more work to do, both in terms of the putting in place policies that will help the private sector create jobs, but also ensure that we have policies in place that will benefit middle-class families and those families trying to get into the middle class,” Earnest said.

“What we examine are the longer-term trends.  And today’s report indicates that for the eleventh consecutive quarter we’ve enjoyed economic growth in this country.  So for those of you scoring along at home, that’s almost three years of consecutive, economic growth in this country,” he added.

Copyright 2012 ABC News Radio


GDP Rose 2.2% in First Quarter

Comstock Images/Thinkstock(WASHINGTON) -- The U.S. economy expanded at an annualized rate of 2.2 percent in the first quarter, a slower pace than expected, keeping the recovery on track, but failing to generate enough activity to knock down the jobless rate significantly.

This first estimate will be revised later, but economists in various surveys had expected gross domestic product growth -- the output of all goods and services, from cars to electricity to manicures -- at 2.5 percent to 3.2 percent annualized.

“In reviewing the numbers, the fear now is that we may be running out of runway before the onset of another recession.  We will not be surprised to see continued growth in GDP given the fact that privately held companies continue to grow at a healthy rate,” said Brian Hamilton, CEO of Sageworks.  “However, what is becoming slightly concerning is that the unemployment rate is not decreasing at a fast enough rate.”

GDP growth was 3 percent in the final three months of 2011.  Much of the growth in the October to December quarter was due to businesses aggressively restocking their supplies.

Historically, Hamilton noted, it has taken approximately 12 to 20 months for unemployment to fall in an expansion to roughly pre-recession levels.

”Right now, we are into the 34th month of the recovery, and, yet, unemployment remains too high.  If we don’t get employment up, we may be bumping into the next recession, during which time we cannot expect job growth,” he said.

Copyright 2012 ABC News Radio


US Economy Grew 3% in Fourth Quarter of 2011

Comstock Images/Thinkstock(WASHINGTON) -- The Commerce Department announced on Wednesday that the U.S. economy grew at a slightly faster pace during the last three months of 2011 than had previously been reported.

The agency said the country's gross domestic product (GDP) increased at an annual rate of 3 percent in last year's fourth quarter, up from the previous estimate of 2.8 percent.  The revised figure marks the strongest growth in a year and a half.

The increase was boosted by rising consumer incomes and a higher savings rate.

Copyright 2012 ABC News Radio

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