May 3, 2024

You are here: Home / Archives for commerce department

A Measure of Business Spending Rises 4.6%

January 28, 2013 by Leave a Comment

The Commerce Department said on Monday that new orders for capital goods increased 4.6 percent last month. The category of nondefense capital goods orders excluding aircraft, a closely watched proxy for investment plans, edged up 0.2 percent in December.

In a further sign of business confidence, the November reading on capital spending plans was revised higher to show a 3 percent gain, up from the 2.6 percent rise reported a month ago.

Many economists had expected businesses to invest more timidly late last year because of uncertainty over government spending cuts and tax increases that had been scheduled to begin this month. But Congress struck a deal to avoid or postpone most of the austerity measures.

Despite the uncertainty, the new data pointed to growing economic momentum as companies sensed improved consumer demand.

“It certainly seems to us that companies are slowly but surely expanding,” said Tim Ghriskey, chief investment officer at the Solaris Group in Bedford Hills, N.Y.

A second report showed that a measure of pending home sales slipped 4.3 percent in December. Still, the housing sector posted a rebound last year and economists expect it will add to growth again in 2013.

New orders for overall durable goods — long-lasting factory goods as diverse as toasters and automobiles — jumped 4.6 percent in December, beating economists’ expectations for a 1.8 percent gain. The gains were broad-based, with orders for machinery, cars and primary metals all increasing.

Orders for civilian aircraft surged 10.1 percent.

Article source: http://www.nytimes.com/2013/01/29/business/economy/durable-goods-orders-exceed-estimates.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Reports Signal Rising Strength in Consumer Spending

January 16, 2013 by Leave a Comment

The government said retail sales rose 0.5 percent last month, compared with a 0.4 percent increase, after revisions, in November. Sales in November were previously reported to have gained 0.3 percent.

Economists polled by Reuters had expected sales to rise only 0.2 percent. Sales were up 4.7 percent from December 2011 and up 5.2 percent for the whole of 2012, suggesting momentum in consumer spending as the year ended.

So-called core sales, which excludes automobiles, gasoline and building materials and corresponds most closely with the consumer spending component of gross domestic product, increased 0.6 percent after gaining 0.5 percent in November.

The second consecutive month of gains in core sales suggested that consumer spending picked up in the fourth quarter after rising at an annual pace of 1.6 percent in the July-through-September period.

The government also said on Tuesday that producer prices fell in December for the third consecutive month as food prices declined by the most in a year and a half.

The Labor Department said its seasonally adjusted Producer Price Index slipped 0.2 percent last month. Economists polled by Reuters had expected prices at farms, factories and refineries to drop 0.1 percent.

A 0.9 percent drop in food costs drove most of the December decline. Excluding volatile food and energy costs, wholesale prices rose 0.1 percent, which was in line with analysts’ forecasts.

The core reading suggested that businesses were seeing little growth in price pressures. It could reinforce the outlook that modest inflation would give the Federal Reserve space to continue with easy-money policies aimed at propping up the economy.

The decline in overall prices brought 12-month inflation to 1.3 percent.

The Commerce Department also said business inventories rose modestly in November as sales increased solidly, indicating that a buildup in inventories would not add much to economic growth in the fourth quarter.

Inventories increased 0.3 percent, to a record $1.62 trillion, after rising by the same margin in October.

The gain in November was in line with economists’ expectations. Automobile inventories rose 0.5 percent after increasing 0.8 percent in October.

Article source: http://www.nytimes.com/2013/01/16/business/economy/retail-sales-improve-producer-prices-fall.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Weekly Jobless Claims Fall

December 27, 2012 by Leave a Comment

The number of Americans filing new claims for unemployment aid fell last week to nearly its lowest level in four and a half years, the Labor Department said Thursday.

Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 350,000, the government said. The previous week’s figure was revised to show 1,000 more applications than previously reported.

After a spike in the wake of Hurricane Sandy, which ravaged the East Coast in late October, the weekly levels of new claims have now dropped to their lowest levels since the early days of the 2007-9 recession. The four-week moving average fell 11,250 last week to 356,750, the lowest since March 2008.

That suggests the surge in layoffs since the recession may have run its course, although companies still are adding to their payrolls at a lackluster pace.

The report included a caveat for the latest week. President Obama declared Monday a holiday for federal workers, and many state offices followed suit and were unable to provide complete data for last week’s jobless claims. Data for 19 states was estimated, a Labor Department official said. Fourteen of those states submitted their own estimates, which tend to be fairly accurate because the state officials work with a significant amount of data, the official said.

Separately, the Commerce Department said new single-family home sales accelerated in November to the fastest pace in two and a half years, and the median sales price jumped from the same month in 2011, two signs that the housing recovery was gaining some steam.

Sales climbed 4.4 percent last month to a seasonally adjusted 377,000-unit annual rate, the government said. That was in line with analysts’ forecasts of a 378,000-unit annual pace.

But government data for new-home sales are subject to substantial revisions. Indeed, the Commerce Department cut its estimate for sales in October by 7,000 to a 361,000-unit rate.

The annual sales pace for November was the quickest since April 2010.

The median price of a new home rose to $246,200, up 14.9 percent from the same month in 2011.

New-home building is expected to add to economic growth this year for the first time since 2005. The housing sector, however, remains a shadow of its former self.

The pace of new-home sales is roughly a quarter of the high clocked in July 2005 when the housing bubble was still inflating. Shortly thereafter, the bubble began to deflate, helping trigger the 2007-9 recession, which was the deepest downturn since the Great Depression.

Article source: http://www.nytimes.com/2012/12/28/business/economy/weekly-jobless-claims-fall.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

U.S. on Track to Meet Goal of Higher Exports

January 21, 2012 by Leave a Comment

WASHINGTON — Two years ago, President Obama popped a surprise into his State of the Union address: His administration would double American exports in five years, helping to create two million jobs.

The bold promise sent the eyebrows of economists and policy experts upward, even as they applauded its intent.

“How will he perform this miracle?” Leslie H. Gelb, president emeritus of the Council on Foreign Relations, asked at the time. “It really is a mystery.”

Two years later, the administration is on track — for now — to meet its ambitious goal. Growing exports have been one of the central drivers of the recovery, accounting for about half the nation’s economic growth since the recession ended. Economists say the administration deserves credit for some of the gains. It has pressured China to increase the value of its currency and open its markets to American businesses. It has worked closely with American companies looking to sell goods and services throughout the world.

Exports are running at about $180 billion a month, according to Commerce Department data, up from $140 billion a month two years ago. They are currently growing at an annual pace of about 16 percent — a percentage-point higher than necessary to double exports to $3.1 trillion by 2015.

But while economists and trade experts praise the export boomlet, they warn that some of the reasons behind the rise, including announcing the goal when exports were at a low point, may be waning.

“I’d say 90 percent is due to macro trends,” said Gary C. Hufbauer, a senior fellow at the Peterson Institute for International Economics. “You could say the best thing the Obama administration did for trade is the stimulus program,” bolstering domestic and global demand, he added.

That will not stop Mr. Obama from promoting export success in his State of the Union address on Tuesday. The White House pushed through three long-stalled free-trade deals, with Colombia, Panama and South Korea. In November, it also announced the framework for a trade and investment agreement among nine Pacific nations, the Trans-Pacific Partnership.

“If we’re going to grow, it’s going to be because of exports,” Mr. Obama told a meeting of business executives at the Asia-Pacific Economic Cooperation meetings in Hawaii in November.

Trade experts say those changes have done some good — but note that American exports got a major boost from economic trends over the last two years, including a global rebound from the depths of the recession and rising prices for commodities, like wheat, cotton and petroleum products.

Indeed, the Obama administration started its five-year clock when global trade volumes were near their recession-era lows. Manufacturing exports of goods like airplanes and machinery, for instance, have snapped back to nearly their prerecession peak.

“We’ve had 15 percent growth,” said Andrew B. Bernard, a professor at the Tuck School of Business at Dartmouth. “A lot of that is recovering — just getting back to where normal life would be. And a lot of it has to do with the rapid recovery of our trading partners.”

He said an “optimistic” — but more realistic — benchmark for annual export growth in the coming years was about 8 percent.

In the last two years, the recovery — and roaring demand from developing countries — also helped to drive up prices for commodities to the benefit of American farmers, miners and energy companies. Farm exports reached a record $137.4 billion in the 2011 fiscal year, which ended Sept. 30, beating the previous annual peak by $22.5 billion, or 20 percent. Sales of petroleum products also hit a record of about $90 billion in 2011, making fuels the country’s single biggest export.

“Coming out of global economic recession, trade does tend to come back faster,” said Ron Kirk, the United States trade representative.

But, he said, “the export initiative is real. And the success has been, actually, pretty remarkable,” he said. “We’re doing everything we can to facilitate trade, knock down barriers and do export promotion.”

Still, the global trends that aided American export growth in the last two years appear to be diminishing, and 2012 poses new headwinds.

First, global investors are flocking to the safety of the stronger dollar in light of the crisis in Europe. That has pushed the borrowing costs of the United States to near-record lows. But it makes American exports relatively more expensive and might mean that developing economies will turn to cheaper, euro-denominated goods and services.

More worrying is a global slowdown and easing commodity prices. Europe, the nation’s biggest trading partner, is on the brink of recession. And the International Monetary Fund and World Bank are also warning that the emerging-market economies that provided the bulk of growth in the global recovery are cooling off.

A financial crisis in the euro zone could slash global trade by more than 7 percent, the World Bank forecast this week. And even if Europe merely muddles through, the bank expects global trade growth of 4.7 percent in 2012, down from 12.4 percent two years ago.

An emerging-market slowdown might prove even more consequential for American exporters than woes in rich European countries. Much of the export growth in the last two years has come from countries like China, South Korea, Brazil and India, and developing countries now buy a majority of exported goods and services. Sales of goods to China, for instance, have grown fivefold over the last decade — while exports to all countries have roughly doubled.

Many forecasters remain optimistic that exports will continue expanding in 2012, if not quite as quickly. And the long-term trends remain in the favor of the United States, as growing emerging-market economies move hundreds of millions of consumers into the middle class.

“There’s a view that there’s more potential” for American exports to China, a senior administration official said.

“If there were a stronger and better market opening, a better playing field and more protection of intellectual property and trade secrets, we could be doing more business with each other.”

In this year’s State of the Union, the White House is expected to announce new measures to help bolster trade, including a new task force to monitor and enforce trade rules.

Article source: http://feeds.nytimes.com/click.phdo?i=347c45ce5e43dbb4a0f8b60298827f10

Filed Under: Business News Tagged With: , ,

U.S. and China on Brink of Trade War Over Solar Power Industry

November 10, 2011 by Leave a Comment

The Commerce Department in Washington on Wednesday opened an investigation sought by American manufacturers who accuse the Chinese of “dumping” solar panels into the United States at prices, aided by government subsidies, lower than the cost of making and distributing them.

Anticipating that move, the government-controlled Chinese solar industry has been unusually vitriolic this week. A trade group accused the White House of turning the commercial complaint into “a political farce, which is very likely a publicity show initiated by the Obama administration for the coming election.”

Meanwhile, a new American trade group was formed this week, representing buyers and installers of solar-energy systems. It argues that any new Commerce Department restrictions on Chinese solar panels would slow the adoption of clean energy technology in the United States and could cost thousands of American jobs. Some environmentalists also oppose policies that might slow the adoption of solar energy.

Solar power is a politically charged issue in Washington, in part because of the bankruptcy this summer of a solar panel maker, Solyndra, after it had received more than $500 million in federal loan guarantees.

The use of solar energy in the United States is growing fast, but Chinese solar panel manufacturers have been growing even faster, raising their American market share to more than half now, from almost none five years ago.

By bringing together complex issues like manufacturing policy, job creation and climate change, the solar panel dispute is emerging as the most politically charged trade case in many years, potentially rivaling Detroit’s legal case against Japanese automakers under a related trade statute in 1980.

The solar panel case “is one of those once-in-a-generation cases,” said Alan W. Wolff, a deputy United States trade representative in the Carter administration who is now the chairman of the international trade practice in the Washington office of the Dewey LeBoeuf law firm.

Although solar energy now contributes only about one-tenth of 1 percent of American electricity, the amount of new solar wattage installed in the United States has been growing more than 70 percent a year since 2008, according to GTM Research, a renewable energy market analysis firm in Boston.

Seven American manufacturers filed a legal petition on Oct. 19 seeking the Commerce Department investigation and asking that tariffs of more than 100 percent be imposed on solar panels from China. The filing accused the Chinese industry of using billions of dollars in government subsidies to help gain sales in the American market and dumping panels at very low prices.

Under American trade laws, Wednesday was the deadline for the department to either begin a formal inquiry — unless it judged the case to be groundless — or find that few companies manufacturing panels in the United States actually supported it.

Whatever action the American government might take, it could prove too late to save the American solar panel industry. China, whose government has been a big promoter of green-energy companies, already accounts for three-fifths of the world’s solar panel production, giving it enormous economies of scale.

And it exports 95 percent of its production, much of it to the United States, rather than using it within China. That has helped push wholesale solar panel prices down sharply — to $1 to $1.20 a watt of capacity today, from $1.80 in January, from $3.30 in 2008.

Although plunging prices could speed up the adoption of solar power, the American industry contends the Chinese are simply not playing fair. Besides Solyndra, two other American solar companies that together represented one-sixth of American manufacturing capacity in the sector went bankrupt in August, while four other American solar companies have laid off workers and cut output since spring of last year.

President Obama said in an interview on Nov. 2 with a television reporter from Oregon, the hub of the American solar panel manufacturing industry, that there were “questionable competitive practices coming out of China” in clean energy.

Article source: http://feeds.nytimes.com/click.phdo?i=15c7eb3d195f1f309d5bb0e386cca48c

Filed Under: Business News Tagged With: , ,

Consumer Spending Jumped 0.6% in September

October 28, 2011 by Leave a Comment

Consumer spending rose 0.6 percent last month, the Commerce Department said Friday. The gain was driven by a big rise in purchases of durable goods, such as autos.

Consumers earned only 0.1 percent more after their income fell by the same amount in August. And after adjusting for inflation, their after-tax incomes fell 0.1 percent last month — the third straight monthly decline.

As a result, they saved less. The savings rate fell to 3.6 percent, the lowest level since December 2007.

Expectations were high after the government said Thursday that consumer spending helped fuel annual growth of 2.5 percent in the July-September quarter, the best quarterly expansion in a year.

Consumer spending is closely watched because it accounts for 70 percent of economic activity. It grew at an annual rate of 2.4 percent in the third quarter. That’s more than triple the growth in the April-June quarter.

The economy would have to grow at nearly double the third-quarter pace to make a dent in the unemployment rate, which has stayed near 9 percent since the recession officially ended more than two years ago.

Economists doubt consumers can keep spending like they did this summer without earning more. Many are struggling with higher prices for food and gas. For spending gains to be sustained, employers need to step up hiring.

In recent months, job growth has stagnated. Employers have added an average of only 72,000 jobs per month in the past five months. That’s far below the 100,000 per month needed to keep up with population growth. And it’s down from an average of 180,000 in the first four months of this year.

Employers added only 103,000 jobs in September, and the unemployment rate remained 9.1 percent for a third straight month.

The government releases the October employment report on Nov. 4.

And spending could tumble next year if Congress fails to extend a Social Security tax cut, which gave most Americans an extra $1,000 to $2,000 this year, or long-term unemployment benefits. Both expire at the end of the year.

Paul Ashworth, chief U.S. economist for Capital Economics, predicts that overall growth will cool in the fourth quarter and next year. He predicts growth of just 1.5 percent for all of 2012.

Mark Zandi, chief economist at Moody’s Analytics, is more optimistic. He expects roughly the same 2.5 percent growth in the October-December quarter and also in the first three months of next year.

Article source: http://feeds.nytimes.com/click.phdo?i=6ff30df43457ddb1a3ef8d799c305b25

Filed Under: Business News Tagged With: , ,

China Denounces Demand for High Tariffs on Solar Panels

October 22, 2011 by Leave a Comment

China accused the American industry of protectionism that could undermine the global economy and harm international efforts to combat global warming. It called for the United States government to reject the industry’s legal filing.

In a carefully worded statement, the Chinese commerce ministry suggested that if the American government imposed import tariffs on Chinese solar panels, then China would purchase less American factory equipment and raw materials for making solar panels.

But the statement did not specify whether American exports would suffer because of deliberate retaliation by the Chinese government, or simply because Chinese companies would have less need for the equipment and raw materials if the United States market were to be partly or completely closed to them.

Either way, “the result is a lose-lose situation, and this will cause an adverse impact on the bilateral trade interests of the two countries,” the statement said.

A coalition of seven American companies filed the trade case against China on Wednesday. They accused Chinese manufacturers of obtaining billions of dollars in Chinese government subsidies to help them buy market share in the United States, and of dumping solar panels in the United States at prices that did not fully cover the cost of manufacturing and distributing them.

Their petition to the Commerce Department in Washington and a related federal agency, the International Trade Commission, seeks tariffs “well in excess of 100 percent” to offset dumping, plus additional unspecified tariffs to offset the suspected subsidies.

The coalition responded quickly to the Chinese criticism. “The Chinese government’s claims that our actions are improper and protectionist, and that its illegal subsidies and massive dumping of solar product are helping the global economy and the environment, are absurd,” said Gordon Brinser, the chief executive of SolarWorld Industries America, the lead company in the coalition. “China is one of the biggest trade protectionists in the world.  In the solar industry, China is gutting manufacturing and jobs here in America and abroad while China’s solar industry pollutes its own people. The accusations have no basis in fact.”

The United States government has 20 days from the filing of the petition to decide whether to take the case, but the law gives it little discretion to reject it. A preliminary ruling is likely by March on the subsidies claim and by May on the dumping claim.

The Commerce Department and the I.T.C. must use narrow criteria set by Congress that give little discretion to either agency except on the question of whether a domestic industry has suffered significant injury from imports. The American solar panel industry has been laying off thousands of workers and closing factories. If the agencies pursue the case, final rulings could take six months or longer.

The Chinese ministry’s statement barely addressed the substance of the industry’s complaint, mentioning only in passing that Chinese policies were “in line with World Trade Organization rules.”

The ministry also made a clear plea for environmentalists to take its side.

“The development of the solar energy industry is a key measure of the Chinese government to address the challenges of climate change and energy security,” the statement said. “The United States has no reason to criticize other countries’ efforts to try to improve humanity’s environment — rather, it should join together with other countries to strengthen cooperation in the field of solar energy, and join together to face the challenges of climate change and the environment.”

Article source: http://www.nytimes.com/2011/10/22/business/global/china-warns-of-bad-effects-if-us-turns-protectionist.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Stocks and Bonds: Strong Retail Sales Numbers Push Shares Higher

October 15, 2011 by Leave a Comment

Analysts also said that fear about Europe’s debt crisis had faded somewhat in the last few days.

Both the Dow Jones industrial average and the Nasdaq composite index are higher than they were at the end of 2010. But the broader Standard Poor’s 500-stock index was still in negative territory, down 2.63 percent for the year.

On Friday , the S. P. 500 rose 20.92 points, or 1.74 percent, to 1,224.58; it gained 5.98 percent for the week. The Dow Jones industrials gained 166.36 points, or 1.45 percent, to 11,644.49, and the Nasdaq rose 47.61 points, or 1.82 percent, to 2,667.85. The weekly gains on the Dow and the Nasdaq were 4.88 percent and 7.6 percent, respectively.

Interest rates continued to rise. The yield on a 10-year Treasury note rose to 2.25 percent, from 2.18 percent late Thursday.

Analysts said the retail sales numbers had beaten expectations. Sales rose 1.1 percent in September from August, and 7.9 percent from the previous year — the fastest clip since February, according to the Commerce Department. The rate of growth between July and August was also revised upward to 0.3 percent, after having been initially reported as flat. Total retail sales were $395.5 billion.

Every category of retailers reported higher sales from a year ago except for electronics and appliance stores, whose sales remained flat. Automobiles were particularly strong, with sales rising 3.6 percent from August, and 8.5 percent from September 2010.

The report was another sign that the economy may be in better shape than many economists thought, said Dan Greenhaus, the chief global strategist at BTIG. The recent rise in stock prices reflects the change in the prevailing outlook, he added.

“When the stock market collapsed, you were uncool if you were weren’t saying that the U.S. was going into recession,” he said.

In a surprise, however, preliminary figures for the Reuters/University of Michigan consumer sentiment index showed a drop to 57.5 for October from 59.4 in September. Analysts expected confidence to rise. Instead, sentiment in every category dropped.

Consumer sentiment has been hovering near the levels reached during the recent recession, which economists take as a troubling sign that the perception of a weak economy could end up becoming a self-fulfilling prophecy.

But Russell Price, a senior economist at Ameriprise Financial, said that attitudes could get out of line with how people were actually acting during turning points in the economy. “If people are confident enough to go out and spend $30,000 on a new automobile, it shows they are pretty confident in their own financial situation,” he said.

European markets were also higher Friday, as the Group of 20 finance ministers began a two-day meeting to discuss their approach to the European debt crisis. The benchmark Euro Stoxx 50 was up 1.2 percent. The FTSE 100 in London gained 1.17 percent, while the DAX in Frankfurt rose 0.89 percent.

Optimism about a European rescue plan also continued to push up the price of the euro against the dollar. The euro traded at $1.3876, up 0.92 percent.

The urgency of the G-20 talks was underlined when the Fitch Ratings agency said Friday that it would review its ratings for some of Europe’s most globally interconnected banks. This week the European Commission proposed requiring the Continent’s largest banks to bolster their protection against losses. There has also been discussion of the International Monetary Fund helping to increase the power of Europe’s rescue plan.

The euro zone is entering a critical countdown, with investors in financial markets expecting European officials at a summit meeting on Oct. 23 and leaders of the Group of 20 on Nov. 3 to endorse specific plans to confront the crisis. For now at least, investors have taken heart at perceived progress in Europe. The VIX, which measures volatility in the market, has dropped to its lowest levels since it spiked on Aug. 4. Popularly known as the fear index, the VIX ended at 28.24, down from a peak of over 45 in early October.

Analysts stressed the fragility of investors’ confidence, and some voiced concern that optimism about the prospect of a plan could fade when its specifics were hammered out.

“We’ve been here before,” said Nariman Behravesh of IHS Global Insight. “It’s pretty tenuous right now.”

Article source: http://feeds.nytimes.com/click.phdo?i=23035c0dfc8ce488843d7ff1a6877eb8

Filed Under: Economy News Tagged With: , ,

Wholesale Inventories Rose in August for 20th Month

October 8, 2011 by Leave a Comment

Another report showed that consumers cut back their borrowing in August by the most in 16 months. The drop suggested that many worried about taking on new debt while the economy slumped and the stock market fluctuated wildly.

The combination of rising sales and inventories should be a good sign for future factory output.

The Commerce Department said Friday that wholesale inventories rose 0.4 percent in August after a 0.8 percent July gain. Sales were up 1 percent, the best showing since a 3 percent rise in March.

The stronger sales gain was an encouraging sign after a slowdown that had raised concerns about whether the economy could be in danger of toppling into a recession. Economists expect overall economic growth to post a modest rebound in the second half of this year.

The August inventory gain pushed stockpiles to a seasonally adjusted level of $464.3 billion, up 21 percent from a September 2009 low of $383.6 billion. Companies were slashing inventories during the recession as they tried to control costs in the face of falling demand. The change to rebuilding inventories has been a major factor supporting growth over the last two years.

The economy slowed significantly in the first six months of this year as consumers, feeling the pinch of soaring gas prices, cut back on spending on other items. The overall economy grew at an anemic rate of just 0.9 percent from January through March, the weakest performance since the recession ended in June 2009.

Economists expect growth will show a slight improvement to about 2 percent in the last half of this year, still too weak to make a significant improvement in the unemployment rate.

The government reported Friday that the unemployment rate in September remained stuck at 9.1 percent for a third consecutive month.

Meanwhile, fewer Americans used their credit cards and a measure of auto and student loan demand fell.

Total borrowing dropped by $9.5 billion in August, the Federal Reserve said Friday. That follows an increase of $11.9 billion in July.

Consumer borrowing had risen for 10 consecutive months before the August decline, which was the largest drop since April 2010

Borrowing for auto and student loans plunged $7.2 billion in August. A category that includes credit cards tumbled $2.3 billion.

The overall decline lowered total borrowing to a seasonally adjusted $2.44 trillion. Borrowing is just 2.1 percent higher than the recent low hit in September 2010.

Americans have been struggling with high unemployment, meager pay raises and a big increase in gasoline prices in the spring. That has depressed consumer spending, which fuels 70 percent of economic growth.

Economists expect modest growth of 2 percent in the second half of the year. Households began borrowing less and saving more when the country fell into recession and unemployment surged.

While economists say they think that borrowing will gradually increase in coming months, they do not expect consumers to load up on debt the way they did during the housing boom. Americans felt wealthier then and were more willing to take on added debt because of the soaring value of their homes.

The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards.

Article source: http://feeds.nytimes.com/click.phdo?i=52f65d2a08dadf8c7e41216fd6d5020b

Filed Under: Business News Tagged With: , ,

Second-Quarter G.D.P. Revised Down to 1%

August 26, 2011 by Leave a Comment

WASHINGTON — The American economy grew much slower than previously thought in the second quarter, as business inventories and exports were less robust, a government report showed on Friday, although consumer spending was revised up.

Gross domestic product rose at annual rate of 1.0 percent, the Commerce Department said, a downward revision of its prior estimate of 1.3 percent. It also said after-tax corporate profits rose at the fastest pace in a year.

Economists had expected output growth to be revised down to 1.1 percent. In the first quarter, the economy advanced just 0.4 percent. The government’s second G.D.P. estimate for the quarter confirmed growth almost stalled in the first six months of this year.

The United States is on a recession watch after a huge sell-off in the stock market knocked down consumer and business sentiment. The plunge in share prices followed Standard Poor’s decision to strip the nation of its top notch AAA credit rating and a spreading sovereign debt crisis in Europe.

While the outlook has deteriorated, data such as industrial production, retail sales and employment suggest the economy could avoid an outright contraction.

The G.D.P. report comes as central bankers from around the globe gathered for a conference in Jackson Hole, Wyo.

Ben S. Bernanke, the Federal Reserve chairman, was to deliver the keynote address on Friday, which will be watched for any sign that a further easing of American monetary policy is on the way to support the ailing economy.

The downward revisions to second-quarter growth came as businesses accumulated less stock than previously estimated. Business inventories increased $40.6 billion instead of $49.6 billion, cutting 0.23 percentage point from G.D.P. growth during the quarter.

However, the slow build-up of inventories means goods are not piling up on shelves, which should support growth in the third quarter. Excluding inventories, the economy grew at a 1.2 percent rate.

Output was also curbed by exports, which grew at a 3.1 percent pace instead of the previously estimated 6.0 percent. Imports increased at a 1.9 percent rate rather than 1.3 percent. That left a slightly wider trade deficit and trade barely contributed to G.D.P. growth. Trade had previously been estimated to have added 0.58 percentage point to overall output.

The drag from business inventories was offset by consumer spending, which was revised up to a 0.4 percent rate from 0.1 percent. The increase in spending, which accounts for more than two-thirds of American economic activity, was still the smallest since the fourth quarter of 2009.

Business spending was revised to a 9.9 percent rate of increase from 6.3 percent as investment in nonresidential structures and equipment and software was stronger than previously estimated. But there are fears that the recent stock market rout could make businesses a bit hesitant to spend on capital and hiring.

The report also showed that after-tax corporate profits increased 4.1 percent in the second quarter after edging up 0.1 percent in the first three months of the year. It also showed inflation pressures abating, with the personal consumption expenditures price index rising at a 3.2 percent rate. That compared to 3.9 percent in the first quarter.

Article source: http://www.nytimes.com/2011/08/27/business/economy/second-quarter-gdp-revised-down-to-1.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,
« Previous Page
Next Page »