GDP figures confirm sluggish economic growth
Kai Ryssdal: If there’s one thing you can count on with government numbers on the economy, it’s that they’re going to change. Reports like the one that came out this morning on Gross Domestic Product almost always get revised.
That was the hope last month when the Commerce Department released its preview of first quarter GDP. A lot of people figured the fairly anemic growth rate of 1.8 percent would be adjusted upward after some more number-crunching. Turns out what looked like a struggling economy — really was, because the number again this morning was 1.8 percent. Our senior business correspondent Bob Moon explains.
Bob Moon: It’s starting to sound like that old song had it right: There ain’t no cure for the summertime blues. For the second straight year, we’re heading into a season that’s not looking as hot as had been forecast, economically speaking.
Ken Mayland: We came into this year with very high hopes, and those hopes are being eroded away.
Ken Mayland at Clearview Economics says even more discouraging were some numbers that did get revised: Consumer spending was considerably weaker than originally estimated, and more inventory backed up on shelves. Neither bode well for the near future.
Standard & Poor’s chief economist David Wyss says a slow recovery like this remains vulnerable.
David Wyss: Obviously, there’s a shot that we could go back into recession. I don’t think it’ll happen on its own.
But Wyss worries we could get pushed back into the rut by sustained higher gas prices, the European debt crisis or too big of a drag on economic growth from higher taxes or deep spending cuts. Government spending already shrank by 5 percent in the first three months of the year, and Clearview’s Ken Mayland says the economy could be fighting more severe cuts in the second half of the year.
Mayland: A lot of people might say, “Yeah, we should reduce spending, rah, rah, rah for that!” At the same time, that spending is somebody’s income. Income that won’t be spent.
There’s always this, though: S&P’s David Wyss points out it could be worse and is, in fact, in most other developed countries.
Wyss: North America will probably have much stronger growth this year than Europe; certainly than Japan, which has gone back into recession as a result of the disaster over there. We may be a sick horse, but we’re still the fastest horse in the race.
I’m Bob Moon for Marketplace.
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