Economy in U.S. Grows at 1.5% Rate
By Shobhana Chandra, Bloomberg News
Jul 27, 2012 8:57 AM ET
Today’s report showed household consumption rose at a 1.5 percent from April through June, down from a 2.4 percent gain in the prior quarter. The median forecast in the Bloomberg survey called for a 1.3 percent advance. Purchases added 1.05 percentage points to growth.
Recent data signal consumers are reluctant to step up purchases. Retail sales fell in June for a third consecutive month, the longest period of declines since 2008. Same-store sales rose less than analysts’ estimates at retailers including Target Corp. (TGT) and Macy’s Inc. (M)
Slowing sales and currency fluctuations led Procter & Gamble, the world’s largest consumer products company, to cut profit forecasts three times this year.
Consumers may remain cautious until hiring accelerates. Payroll gains averaged 75,000 in the second quarter, down from 226,000 in the prior three months and the weakest in almost two years. The unemployment rate, which held at 8.2 percent in June, has exceeded 8 percent for 41 straight months.
Cutbacks by government agencies continued to hinder growth as spending dropped at a 1.4 percent annual rate in the first quarter, the ninth decrease in the last 10 periods. The decline was led by a 2.1 percent fall at the state and local level that marked an 11th consecutive drop.
Business investment cooled last quarter reflecting stagnant spending on commercial construction projects. Corporate spending on equipment and software improved, climbing at a 7.2 percent pace, up from a 5.4 percent increase in the previous quarter.
A report yesterday showed the corporate spending outlook has dimmed. Bookings for non-military capital goods excluding aircraft, a proxy for future investment, fell at a 3.1 percent annual rate in the second quarter, the first decrease since the same period in 2009, when the U.S. was still in a recession, according to Commerce Department data.
US economic growth slowed to 1.5 pct. annual rate in Q2 as consumer spending weakened
By Associated Press
Friday, July 27, 9:14 AM
Growth at or below 2 percent isn’t enough to lower the unemployment rate, which was 8.2 percent last month. And most economists don’t expect growth to pick up much in the second half of the year. Europe’s financial crisis and a looming budget crisis in the U.S. are expected to slow business investment further.
“The main take away from today’s report, the specifics aside, is that the U.S. economy is barely growing,” said Dan Greenhaus, chief economic strategist at BTIG LLC. “Along with a reduction in the actual amount of money companies were able to make, it’s no wonder the unemployment rate cannot move lower.”
The U.S. economy has never been so sluggish this long into a recovery. The Great Recession officially ended in June 2009.
Until a few weeks ago, many economists had been predicting that growth would accelerate in the final six months of the year. They pointed to gains in manufacturing, home and auto sales and lower gas prices.
But threats to the U.S. economy have left consumers too anxious to spend freely. Jobs are tight. Pay isn’t keeping up with inflation. Retail sales fell in June for a third straight month. Manufacturing has weakened in most areas of the country.
24.6% Unemployment Rate in Spain
By RAPHAEL MINDER, The New York Times
Published: July 27, 2012
Just over 5.69 million Spaniards ended the second quarter jobless, raising the unemployment rate to a record 24.6 percent, compared with 24.4 percent in the first quarter, according to the latest national employment statistics published Friday.
Youth unemployment rose to 53 percent in the second quarter, up 1.3 percentage points from the previous quarter and 7 percentage points from a year ago.
Some of Spain’s leading banks reported significant drops in earnings Friday, largely the result of having to set aside more money to cover loans that could default.
CaixaBank said its first-half profit fell 80 percent to €166 million as it provisioned another €3.735 billion against loans made to Spain’s collapsed property sector. Banco Popular reported a 42 percent decline in first-half profit, to €176.5 million, after provisioning €3.4 billion. On Thursday, Banco Santander, Spain’s biggest commercial bank, had also reported a sharp drop in profit as a result of higher provisioning.
The yield, or interest rate, on the 10-year Spanish sovereign bond was at 6.726 percent, down 0.10 percentage point. The Italian 10-year yield was at 5.938 percent, down 0.077 percentage point.