By Nick Mann | 27 July 2012
The US economy grew by 1.5% in the second quarter, down from 2% in the first three months of the year, according to figures published today by the country’s Bureau of Economic Analysis.
A slowdown in consumer spending and in investment in new factories and housing contributed to the deceleration in gross domestic product growth. The 1.5% estimate was roughly in line with analysts’ expectations but represents a further decline from the 2.8% GDP growth recorded in the final quarter of 2011.
Government spending fell, in particular at state and local level, where it reduced by 2.1%, as did spending on durable goods such as cars and household appliances.
This was partly offset by an upturn in private inventory investment – the different between goods produced and goods sold – as well as acceleration in exports, the BEA said. At 0.4% the reduction in federal government spending was also significantly less than the 4.2% recorded in the previous quarter.
Last month, the US Federal Reserve downgraded its forecast for growth for 2012 as a whole from 2.9% to 2.4%. It also downgraded its forecast for 2013 growth from 3.1% to 2.8%.
The slowdown in growth is likely to come as a blow to President Barack Obama as the US presidential election in November draws closer.
Alan Krueger, chair of Obama’s Council of Economic Advisers, said that despite the slowdown in growth shown by today’s estimated figures, the US economy had grown by 6.7% over the past three years.
‘While the economy continues to move in the right direction, additional growth is needed to replace the jobs lost in the deep recession that began at the end of 2007.’
Krueger highlighted measures being taken to strengthen growth and increase job creation, including proposals to extend tax cuts to ‘protect’ middle-class families and ensure ‘virtually every’ small business owner does not face a tax increase at the start of 2013.
‘The Senate passed the president’s plan this week and President Obama has said that as soon as the House will act he will sign it right away in order to give certainty and security to middle-class families,’ he added. ‘Extending these tax cuts would provide more certainty for 98% of American families and 97% of small business owners.
