US growth slows as consumers cut back on spending

GDP of the world’s largest economy grew at 1.5% between April and June, government figures show, compared to 2% in the previous three months, in a sign of a sluggish recovery as U.S. consumers spend less and the economy emerges as a key issue for the 2012 presidential election…

Powered by article titled “US growth slows as consumers cut back on spending” was written by Dominic Rushe in New York, for on Friday 27th July 2012 13.27 UTC

The US economy slowed again during the second quarter of the year, government figures showed Friday.

The nation’s gross domestic product (GDP) – the broadest measure of the economy – grew at a sluggish 1.5% between April and June, the US commerce department said. The latest figure compares to 2% growth during the prior three months, and 4.1% in the fourth quarter of 2011.

The slowdown came as consumers cut back, local governments cut spending, factories received fewer orders and exports were hit by a global slowdown and a stronger dollar.

The latest news comes as the number of jobs created each month has also fallen sharply. The GDP figure is likely to be a blow to president Barack Obama as the economy emerges as the key issue of the 2012 election.

A Wall Street Journal/NBC News poll released this week found the economy was the only issue for which voters expressed more confidence in Mitt Romney, Obama’s Republican rival, than the president.

The GDP figure was slightly higher than many economists had predicted. Economists surveyed by Dow Jones Newswires had expected a rate of 1.3% in the second quarter.

Consumer spending slowed in the quarter. Personal consumption expenditures rose 1.5% during the quarter, down from a 2.4% in the first quarter and the smallest gain in a year.

Spending on durable goods – including cars and home appliances – fell 1.% in the second quarter.

Cuts in government spending, especially at the local level, also held back growth. State and local spending fell 2.1% during the quarter while federal spending declined 0.4%.

Non-residential fixed investment, including business spending on structures and equipment, increased 5.3% during the second quarter, down from 7.5% in the previous quarter.

The US economy has grown for 12 consecutive quarters, but the gains have been small.

“The current recovery has been utterly anaemic in relation to the average recovery in the post-war era. Real GDP is growing at a pace slower than virtually any recovery since the war,” Dan Greenhaus, chief global strategist at BTIG, said in a note to clients. © Guardian News & Media Limited 2010

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