Monday, 30 April 2012

US Government Views Slow Economic Recovery Differently

Although, the US economy recovered sluggishly at a 2.2 percent annual rate from January through March, the government said Friday that this was the result of continuing challenge of spurring strong growth and that the economy grew at a 3.5 percent annual rate if only the private-sector components of the GDP are taken into consideration.

The first-quarter results were disappointing as they reflected the March jobs report, which fell short as only 120,000 jobs were added after a chain of many months of strong employment gains.

Some component parts of the report offered a ray of hope however, the gross domestic product represented by the sum of goods and services produced in the year fell short of expectations. The saving grace was provided by strong consumption in the private sector although continuing decline in government spending dampened overall growth.

The spending by the federal government declined 5.6 percent including a drop of 8.1 percent in military spending. State and local governments spent 1.2 percent less than in the earlier period. The private sector component of the GDP grew at a 3.5 percent annual rate. The monthly employment figures were impacted by the continuing drop in state and local government jobs, raising questions about the future course of the federal budget policies. However, the economy continues to grow, but slowly.

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