News

US Economic Recovery Not as Strong as Previous Estimates

US Economic Recovery Not as Strong as Previous Estimates
US Economic Recovery Not as Strong as Previous Estimates

Multimedia

New economic data shows the U.S. economy grew more slowly than first thought.  The US Commerce Department reports the nation's gross domestic product (GDP) expanded at a 2.2 percent annual rate from July to September, down from an earlier estimate of 2.8 percent.  Despite the downgrade, other indicators suggest a strong showing in the fourth quarter.  But some economists say an economic turnaround is not a sure thing.

The Commerce Department says the sum of all goods and services produced in the U.S. between July and September was lower than initial estimates because consumers did not spend as much, commercial construction was weaker and companies reduced their inventories. 

Even so, the final GDP numbers signal a return to growth after four straight quarters of decline.  Wall Street reacted positively, sending key indexes sharply higher - buoyed in part by a nearly 7.5 percent jump in sales of existing homes.
 
Economist Martin Neil Baily at the Brookings Institution says the latest indicators suggest the economy is on pace to beat third quarter results. "Most forecasters are looking at more than that in the fourth quarter, maybe four percent [GDP growth] or a little more than that. So given that the economy is turning around, it sort of looks good," he said.

The downside is that much of the growth in the third quarter was fueled by government stimulus spending.  That includes the "Cash for Clunkers" rebates and the $8,000 tax credit for first time homebuyers.
 
As government programs unwind, so could the recovery. "Some of those forecasters see strong growth in 2010 and 2011.  But I think that's far from a sure thing.  I think it's quite possible that what we're seeing now is a kind of bounce back with inventories and so on and that you may not get a continuation of strong growth in 2010 and 2011," Baily said.

He admits economic forecasting is not a perfect science. He says the worst case scenario would be a period of growth, followed by stagnation and then another recession. "Unemployment is still very high, consumers have lost a lot of wealth.  They're uncertain about their own employment situation.  If they lose a job, it's very hard to get another job, so there are a lot of scary things out there in the economy," he said.

Despite the warning, analysts say the economy has bounced back faster than expected.

A survey of leading economists predicts the U.S. economy will grow four percent between October and December.

The government releases its first estimate of fourth quarter activity on January 29.

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs