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U.S. Economy Continued To Slow In Second Quarter
Originally published on Fri July 27, 2012 6:02 pm
AUDIE CORNISH, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.
ROBERT SIEGEL, HOST:
And I'm Robert Siegel. The government said today that the U.S. economy continued to slow during the second quarter of the year. The overall U.S. growth rate fell to just 1.5 percent, as consumers cut back on purchases and spending by businesses, which has been a source of economic strength, also fell. NPR's Jim Zarroli tells us more.
JIM ZARROLI, BYLINE: Today's numbers were about in line with economists' expectations, but expectations had been low. Of special concern was the decline in consumer spending. It rose just 1.5 percent, down from 2.4 percent the quarter before. Sung Won Sohn, professor of economics at California State University Channel Islands, says people bought less partly because of the weak job market.
SUNG WON SOHN: They decided to close their wallets and stop spending, basically. Car sales were especially hard hit.
ZARROLI: There were some bright spots in the report. Exports were up and spending on services rose. Inflation pressures eased a bit, but government spending fell for the ninth straight quarter and businesses have stopped investing the way they were. Sohn says that is at least partly related to the election and the uncertainty over taxes and spending.
The troubles in Europe are also taking a toll on the economy.
SOHN: At the moment, all the risks are the downside. The economy is more likely to grow at a slow pace or even go into recession. And there aren't too many upsides.
ZARROLI: The weak numbers come in the middle of a close election campaign and Republicans were quick to seize on them as evidence that President Obama's economic policies have failed. Glenn Hubbard, a Romney advisor said with the economy growing at such a slow pace, it can never return to full employment. The White House acknowledged that the numbers were disappointing, but Alan Krueger, chairman of the Council of Economic Advisors, says the economy is still crawling back from the devastating collapse of 2008.
ALAN KRUEGER: Stronger economic growth will help to create stronger job growth, but after contracting at a record rate at the end of 2008, it's an encouraging sign that the economy has continued to expand.
ZARROLI: Krueger said it was up to Congress to stimulate growth by agreeing to keep taxes low on middle class families and passing more of the provisions in President Obama's jobs bill. But Congress has been unwilling to take such steps during a hotly contested election like this one and today's tepid economic numbers seem unlikely to change that.
Jim Zarroli, NPR News. Transcript provided by NPR, Copyright National Public Radio.