US GDP Growth Slows as Consumers Spend Less

Submitted by Tradervox 1 on Mon, 30/07/2012 - 12:10
in

Tradervox.com (Dublin) – The GDP data released on July 27 showed that the world largest economy grew at a slower pace in the second as compared to the first quarter. According to a report released by the US Commerce Department, the country’s GDP, which measures the value of goods and services produced in the US, rose only by 1.5 percent in the second quarter; the report also indicated that household purchases grew slowest in a year. Household purchases account for 70 percent of the GDP. The report blamed the slow pace of growth on Europe’s debt crisis and the pending US tax changes. It also came as the Federal Reserve policy makers prepare to meet this week to discuss on measures that should be taken to spur the economy.

According to Dean Maki, who is the Chief US economist in New York at Barclays Capital, the moderate growth in the economy may persist for longer but the pace of growth might pick up in the second half of the year. Chris Rupkey, the Chief Financial Economist in New York at Bank of Tokyo-Mitsubishi UFJ Ltd agreed with these comments saying that the economy remains on a moderate expansion trend; he also added that the current growth will benefit from oil prices declines and signs of easing in the European debt crisis.

The GDP data released showed that household consumption increased by 1.5 percent in the second quarter, down from 2.4 percent in the Q1. Purchase contributed 1.05 percentage points to the US growth according to the report. There is a general decline in consumer spending in the country as the country enters an election period. The current trend in the US economy adds to concerns that global economies are slowing down. According to Scott Davis, who is a Chief Executive Officer, the uncertainty in the US economy has resulted from the coming election, which is expected to be the closest one in history.

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