clear
Sunday May 3rd, 2015 9:03PM

Few think sluggish US economy will strengthen soon

By The Associated Press
WASHINGTON - A U.S. economy that plodded along in the first three months of the year likely grew even less in the April-June quarter. And most economists no longer think growth will strengthen much in the second half of 2012.<br /> <br /> Weaker hiring, nervous consumers, sluggish manufacturing and the overhang of Europe's debt crisis might be pointing toward everyone's big fear: another recession.<br /> <br /> Against that background, the government on Friday will issue its first of three estimates of how much the U.S. economy expanded last quarter. The consensus forecast is that growth slowed to an annual rate of 1.5 percent, according to a survey of economists by data firm FactSet. The Commerce Department will issue the estimate at 8:30 a.m. EDT.<br /> <br /> A quarterly growth rate of 1.5 percent would be the weakest in a year. It would follow a meager 1.9 percent rate in the first three months of 2012.<br /> <br /> Much more growth would be needed to fuel stronger hiring. Economists generally say even 2 percent annual growth would add only about 90,000 jobs a month. That's too few to drive down the unemployment rate, which is stuck at 8.2 percent.<br /> <br /> The U.S. economy has never been so sluggish this long into a recovery. The Great Recession officially ended in June 2009.<br /> <br /> Until a few weeks ago, many economists had been predicting that growth would accelerate in the final six months of the year. They pointed to gains in manufacturing, home and auto sales and lower gas prices.<br /> <br /> But threats to the U.S. economy have left consumers - who account for about 70 percent of the economy - too anxious to spend freely. Jobs are tight. Pay isn't keeping up with inflation. Retail sales fell in June for a third straight month. Manufacturing has weakened in most areas of the country.<br /> <br /> Fear is also growing that the economy will fall off a "fiscal cliff" at year's end. That's when tax increases and deep spending cuts will take effect unless Congress reaches a budget agreement.<br /> <br /> All that is making companies reluctant to expand and hire much.<br /> <br /> From April through June, U.S. job growth slowed to 75,000 a month, down from a healthy 226,000 average in the first three months of the year.<br /> <br /> "The European situation has been getting worse and is dragging down the global economy," said Sung Won Sohn, an economics professor at California State University. "And we have got the fiscal cliff to worry about in the United States."<br /> <br /> Six of the 17 countries that use the euro currency are in recession. Growth has also weakened in powerhouse emerging markets in China, India and Brazil. With these economies slowing, so is their demand for U.S. exports.<br /> <br /> Sohn estimates the likelihood of a U.S. recession within the next 12 months at 30 percent to 35 percent. That's up from his estimate of 20 percent six months ago.<br /> <br /> Nariman Behravesh, chief economist at IHS Global Insight, puts the chance of a recession at 25 percent. He expects growth to increase slightly to an annual rate above 2 percent in the second half of this year.<br /> <br /> Other economists are gloomier. They think growth will muddle along below 2 percent through 2012.<br /> <br /> Many economists think consumers pulled back sharply on spending last quarter. Analysts at JPMorgan estimate that consumer spending grew at a scant 1 percent annual pace in the April-June period, down from a 2.5 percent annual increase in the first quarter.<br /> <br /> "Businesses and consumers are quite worried, so they're holding back," Behravesh said. "For consumers, the worry is the jobs markets. Businesses are worried about Europe. And China is looking weaker than most of us would have thought even a few months ago."<br /> <br /> Behravesh said even companies that think Congress will manage to reach a budget deal by year's end are too uncertain about possible tax changes to step up hiring.<br /> <br /> "That is making them very cautious about investment decisions," he said.<br /> <br /> In delivering the Federal Reserve's midyear economic report to Congress last week, Chairman Ben Bernanke sketched a bleak picture. And he warned that unless lawmakers strike a deal, the tax increases and deep spending cuts that will take effect Jan. 1 could trigger another U.S. recession.<br /> <br /> Bernanke has said the Fed is prepared to take further action if unemployment stays high. He hasn't specified what steps it might take or whether any action is imminent.<br /> <br /> The lackluster economy is also raising pressure on President Barack Obama in his re-election fight with Mitt Romney, the presumptive Republican presidential nominee.<br /> <br /> But few think the Fed, the White House or Congress can or will do anything soon that might rejuvenate the economy quickly. Many lawmakers, for example, refuse to increase federal spending in light of historically large budget deficits.<br /> <br /> "There is nothing out there to light a fire under the economy," said Joel Naroff, chief economist at Naroff Economic Advisors.<br /> <br />
  • Associated Categories: U.S. News, Business News
© Copyright 2015 AccessNorthGa.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Doctors: Blood clot located in Clinton's head
Secretary of State Hillary Rodham Clinton developed a blood clot in her head but did not suffer a stroke or neurological damage, her doctors said Monday. They say they are confident that she will make a full recovery.
3:55PM ( 2 years ago )
Illinois Sen. Kirk to return a year after stroke
Nearly a year after a stroke left him barely able to move the left side of his body, U.S. Sen. Mark Kirk is expected to climb the 45 steps to the Senate's front door this week - a walk that's significant not just for Illinois' junior senator, but also for medical researchers and hundreds of thousands of stroke patients.
3:54PM ( 2 years ago )
U.S. News
Ga. ethics legislation could end free tickets
General Assembly approval next year of a proposed ethics reform measure could endanger an important fall tradition for Georgia lawmakers - free football tickets.
6:26PM ( 2 years ago )
Abortion restrictions, tax changes loom in Ga.
Tax breaks for manufacturers and higher unemployment taxes for employers take effect with the new year in Georgia, but it remains to be seen whether the state's newest abortion restrictions will be enforced.
6:23PM ( 2 years ago )
Business News
Obama again avoids calling 1915 Armenian killings 'genocide'
WASHINGTON (AP) — President Barack Obama will once again stop short of calling the 1915 massacre of Armenians a genocide, prompting anger and disappointment from those who have been pushing him to ful...
1:00PM ( 1 week ago )
Ex-NFL star Hernandez convicted of murder, sentenced to life
FALL RIVER, Mass. (AP) — Former New England Patriots star Aaron Hernandez was convicted of first-degree murder and sentenced to life in prison Wednesday for a deadly late-night shooting, sealing the d...
8:54PM ( 2 weeks ago )
Clinton kicks off 2016 campaign online, heads next to Iowa
WASHINGTON (AP) — Hillary Rodham Clinton jumped back into presidential politics on Sunday, making a much-awaited announcement she will again seek the White House with a promise to serve as the "champi...
7:56PM ( 3 weeks ago )
Hall, White, Jefferson schools recognized nationally for use of technology
Three school districts in northeast Georgia - Hall, White, and Jefferson - have received national recognition for their use use of innovative technologies. They earned top spots in the Center for Digital Education's and the National School Boards Association's 10th annual Digital School Districts Survey.
By Staff
1:00PM ( 3 weeks ago )
US Capitol lockdown lifted after man fatally shoots himself
WASHINGTON (AP) — A precautionary lockdown of the U.S. Capitol was lifted after about two hours Saturday following a suicide by a man carrying a protest sign.The man died after shooting himself on the...
6:15PM ( 3 weeks ago )