U.S. Economy Growth Doesn't Mean Clear Road Ahead
The Department of Commerce released the report Friday that showed the economy turning up at the end, but overall had just 1.7 percent growth throughout the year. In comparison, 2010 saw a 3.0 percent increase.
The numbers would have to be higher to reduce unemployment and the data points to slower growth ahead, the Associated Press reported. The unemployment rate still sits at a high 8.5 percent.
Adolfo Laurenti, deputy chief economist at Mesirow Financial told Reuters that part of the decline in unemployment is due to the fact that people have stopped looking for work.
“The high level of people out of the workforce and underemployed people show there isn’t really much income generation to contribute to a better spending pattern,” he said.
The boost in the economy benefitted from consumer purchases and exports but suffered from a lack of federal government spending. The cuts in annual government spending were the sharpest in four decades, the AP reported.
Auto sales were at the highest in years, the report dating back to the first quarter of 2008 shows.
Chief economist at Moody’s Analytics, Mark Zandi, told The Washington Post that some fear being too optimistic.
“Even though things feel better at the moment, people don’t want to make the same mistake,” Zandi said. “The forecasts are much more cautious. This collective psyche is very fragile.”
Additionally, Zandi said concern over Europe’s economic future and the struggling U.S. housing market continues to weigh the economy.
Reach executive producer Agnus Dei Farrant here.
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