Gross domestic product expanded at a 1.3% annual rate in the second quarter, after a 0.4% pace in the prior period, the worst six months since the recovery began in June 2009, Commerce Department figures showed yesterday. Economists said the slowdown leaves the recovery susceptible to being knocked off course by shocks at home or abroad.
That puts pressure on Federal Reserve policy makers to explore additional steps to boost the economy, including another round of bond purchases.
Congress may deliver the final blow to the US economy. With three days left until the Treasury Department runs out of borrowing authority, Republicans and Democrats are still at odds over what budget cuts they should make before raising the $14.3 trillion debt ceiling.
The squabbling is a “confidence hit” for both U.S. and international businesses and casts a pall over the economy in the second half, said El-Erian, chief executive officer of Pacific Investment Management. “We have signaled that we can create a crisis out of thin air.”
Congressional agreement on budget cuts could cause troubles of its own. Less spending by the Federal government would be “a real problem” for the economy, some economist say, meaning that even if a budget were to pass the risk of another market downturn would not.
Much of the weakness last quarter came from a pullback in consumer spending, which accounts for about 70% of the economy. Family purchases rose only a fraction signaling a return to 2009 numbers. The slump reflected a plunge in purchases of durable goods like automobiles. Higher expenses for food and energy may have curtailed spending on less essential items.
The absence of faster job growth is also weighing on Americans. The unemployment rate climbed while payrolls grew by 18,000, the fewest in nine months. Moreover, with jobs outlook dim, some worry that the 2012 elections maybe one for the history books, a sign that is never good for the economy.
(아주경제 앤드류 이 기자)
reporter
Park Sae-jin
swatchsjp@ajunews.com