Entries in US Economy (28)


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


More Optimism About Economic Growth in 2013, Survey Finds

Comstock Images/Thinkstock(NEW YORK) -- More economists are raising their forecast for growth this year.

A new survey by the National Association for Business Economics finds that 50 percent of corporate economists now think the economy will expand by 2.1 percent or better in 2013.  That's up from 36 percent last October.

"We're seeing slow but certainly steady progress on a lot of fronts," says Tom Gill, the director of economics at the National Electrical Manufacturers Association.

Gill, who oversees the survey, says one of the bright spots is the jobs market.

"The labor market is really gaining momentum.  There was very positive news looking ahead there.  A larger share of firms now expect to expand their payrolls in the next six months," he says.

Gill expects sales at many companies to rise this year.

"We've seen wage and salary gains pick up in the fourth quarter, which is a positive for consumer spending going forward.  Which has ramifications for overall growth in sales," he says.

Copyright 2013 ABC News Radio


US Economy Not Making Rapid Growth Soon, Economists Say

Comstock Images/Thinkstock(NEW YORK) -- Will the U.S. economy get better soon?  

Yes, but not by much, according to a new survey of business economists out on Monday.  Forecasters from the National Association for Business Economics expect only modest growth in the first half of next year.

"But they do expect growth to accelerate as the year progresses," adds economist Nyantara Hensel.

She says panel members are concerned about tax and spending gridlock in Washington.

"One of the major headwinds continues to be concerns about whether or not Congress is going to be able to straighten out their spending plans," Hensel says.

But while business investment may sag, there is a bright spot: "The improvement in the housing market is likely to continue," Hensel notes.

Copyright 2012 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


CEOS Very Worried About 'Fiscal Cliff,' Survey Finds

Hemera/Thinkstock(NEW YORK) -- America's job creators are bearish on the economy over the next six months, according to Business Roundtable's third quarter CEO Economic Outlook Survey.

The chief executives are mostly concerned with the upcoming "fiscal cliff," the possibility that taxes will go up and deep spending cuts that will be instituted at the beginning of the 2013.

The Federal Reserve and virtually all economists say that if it happens, the economy could be plunged into another recession, throwing millions more out of work.

As a result of this uncertainty, which isn't expected to get resolved by Congress, if at all, until after Election Day, just 29 percent of CEOs say they plan to do more hiring and 34 percent say they'll be trimming staff over the next six months.

While the CEOs aren't expecting miracles at this point, the survey says they would evidently feel better if lawmakers simply come up with a framework that specifies tax increases and what changes might be made to the tax code and other regulations.

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


Economy Drives Birthrate Down to Lowest Level in 25 Years

Jupiterimages/Thinkstock(NEW YORK) -- Seeing fewer babies these days?  That's because young couples don't think they can afford another hungry mouth to feed.

Demographic Intelligence says that America's birthrate is at its lowest point since 1987 due to people in their 20s reluctant to take on the responsibility of having a kid with the economy still foundering.

The company, which delivers quarterly birth forecasts to corporate powerhouses that make products for children, says the birthrate has tumbled from an average of 2.12 births per woman in 2007 to 1.87 in 2012 and a projected 1.86 next year.

Demographic Intelligence estimates that the fertility rate could take a couple of years to rebound.

Sam Sturgeon, president of Demographic Intelligence, says this change in birthrate "doesn't hit all people equally, and it hit some people much harder than others," as typical with any economic downturn.

For instance, less-educated people and Hispanics were the most likely to put off having children while those who graduated college as well as non-Hispanic whites and Asian Americans actually experienced a small increase in babies.

Things that factor into not starting a family include unemployment, big college loans and the necessity of moving back in with mom and dad.  Meanwhile, the immigration of Hispanics into the U.S. has also slowed down.

What's more, Democraphic Intelligence predicts the drop in the birthrate now will have repercussions later since the longer people delay having their first child means longer delays for subsequent babies.

Copyright 2012 ABC News Radio


Federal Reserve Closer to Providing More Stimulus?

Chip Somodevilla/Getty Images(NEW YORK) -- The Federal Reserve may be getting ready to pounce. 

Published reports say top officials are moving closer to taking new steps to boost economic growth.  This may include expanding the Fed's holdings of mortgage-backed securities, according to The New York Times.

A new round of quantitative easing -- the first since 2010 -- is expected to be discussed when the Fed’s policy-making committee meets next week.  Both the Times and Wall Street Journal say some members want immediate action, while others favor delaying the decision at least until September.

Interest rates are already at record lows.  The 10-year Treasury note, a benchmark for fixed rate mortgages, is now at 1.4 percent.

Copyright 2012 ABC News Radio


Is a New Recession Ahead?

Comstock Images/Thinkstock(NEW YORK) -- New cracks may be appearing in the economy’s fragile recovery.

The number to watch this week will be Friday’s first estimate of GDP growth for the second quarter.  It may drop to under 1.5 percent, after a weak 1.9 percent growth for the first three months of this year.

In recent days, Wall Street economists have dropped their estimates of annual growth and some say the risk of a recession is rising.

“We’re worried about growth slowing down everywhere, and about it being self-reinforcing,” Peter Fisher, global head of fixed income for Black Rock, the world’s largest asset manager, told USA Today.  “I’m less worried about whether growth is slowing, and more worried about how much farther we have to go.”

Copyright 2012 ABC News Radio


Ben Bernanke: Same Economic Analysis, Different Day

Chip Somodevilla/Getty Images(WASHINGTON) -- The appearance by Federal Reserve Chairman Ben Bernanke Wednesday before the House Financial Services Committee went pretty much the same as Tuesday's testimony before a Senate panel.

Bernanke didn't deviate from his contention that high unemployment is keeping the economy from expanding and that the Fed might take some action, but he again wasn't specific about what steps might be taken or when they might happen.

Just like Tuesday, Bernanke also raised red flags that the economy was headed towards a "fiscal cliff" if Congress doesn't move to extend Bush-era tax breaks and stop drastic spending reductions.

Otherwise, the Fed chief said another recession was possible, throwing even more Americans out of work.

About the only difference during Wednesday's appearance was Texas Congressman Ron Paul again pushing a bill that would allow Congress to audit the Fed's monetary policy decisions, an action that Bernanke described as a "nightmare scenario."

He noted, "There's a lot of evidence that an independent central bank that makes decisions based strictly on economic considerations and not based on political pressure will deliver lower inflation and better economic results in the longer term."

Paul has long called for eliminating the Fed, alleging, "Trillions and trillions of dollars (are) being printed out of thin air."

Copyright 2012 ABC News Radio

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