U.S. Economy Grew 1.9% in First Quarter on Consumer Spending
By Shobhana Chandra - Jun 28, 2012 8:30 AM ET
The U.S. economy grew 1.9 percent in the first quarter, reflecting a gain in consumer spending that now shows signs of cooling as the labor market weakens.
The revised gross domestic product reading matched the increase previously calculated by the government, Commerce Department figures showed today in Washington. Corporate profits were revised to show a drop, the first in more than three years.
Slowing sales at companies from Darden Restaurants Inc. (DRI) to O’Reilly Automotive Inc. (ORLY) indicate American households are reluctant to boost their spending, which accounts for about 70 percent of the economy. A struggling job market and slowing global markets will make it harder to spur the U.S. expansion, underscoring the concern of Federal Reserve policy makers.
“The economy will struggle to improve its performance,” Millan Mulraine, a senior U.S. strategist at TD Securities in New York, said before the report. “The ultimate question for the Fed is, has growth slowed sufficiently to justify more action. They will be watching for more signs.”
The median forecast of economists surveyed by Bloomberg News was 1.9 percent following a 3 percent increase in the prior quarter. Projections of the 75 economists polled ranged from 1.5 percent to 2.3 percent. The government’s GDP estimate is the third and final for the first quarter.
The number of applications for unemployment benefits hovered last week near the highest level of the year, showing little improvement in the labor market, another report today showed.
more@ Bloomberg.com
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