Here’s a surprise: the American economy is not expanding at what experts had hoped.
Economists had predicted that second quarter consumer spending in the US would increase by 1.8 percent. Instead, the growth domestic product in the States managed only to go up by a 1.3 percent annual rate.
March’s earthquake and subsequent wave of tragedy in Japan led to a severe decline in automotive production, which Reuters reports largely limited cars available for the American public. Coupled with high prices in gasoline, the automotive industry largely played a role in the weak GDP growth. May’s average price for a gallon of gasoline, around $4, was the highest the country has seen in almost three years.
Household consumer spending, nearly three-quarters of the country’s economic activity, rose a meager 0.1 percent this quarter. That’s the weakest rise the country has seen since the recession ended two years ago. Earlier this year that pace was at 2.1 percent.
Taking into consideration higher prices and fewer employed Americans (the most recent unemployment figure is at 9.2 percent), it should come to no surprise that GDP growth isn’t quite what experts had hoped it would be.
Experts predict that it won’t get much better in the near future. “All the data we got for June thus far suggest that as we entered the third quarter, we did not gain any momentum setting up for a good third quarter,” Christopher Probyn, chief economist at State Street Global Advisors in Boston, tells Reuters. “We are not starting the third quarter on a positive note,” he adds, in a statement issued even before the GDP report was released.
To Bloomberg, HIS Global Insight economist Nigel Gault echoes those thoughts, saying hopes for a rebound in the second half of 2011 are “melting away.”