News / USA

Central Bank Says US Economy 'Paused'

A television screen in a post on the floor of the New York Stock Exchange shows the decision of the Federal Reserve, January 30, 2013.
A television screen in a post on the floor of the New York Stock Exchange shows the decision of the Federal Reserve, January 30, 2013.
VOA News
Top officials of the U.S. central bank say the economy "paused" in recent months.

That is why the Federal Reserve decided to continue an effort to stimulate the economy.  That program involves buying $85 billion worth of bonds a month, and is intended to cut long-term interest rates.  The bank is also keeping short term interest rates at the record-low levels where they have been for some time.

The fed action came the same day a study showed the U.S. economy shrank slightly in the last three months of 2012.  Government experts blamed the slowdown on cuts in government spending, slowing exports, and businesses keeping smaller inventories.

Wednesday's report from the Commerce Department says the economy shrank at a one-tenth of one percent annual rate in the fourth quarter.  That is the worst performance since 2009, during the recession.

The decline is a sharp slowdown from the more than three percent annual growth rate in the prior quarter.  This latest report came as U.S. consumers cope with higher taxes and while Washington is considering further spending cuts. Exports have been hurt by a recession in Europe, which cut demand for U.S.-made goods. 

Growth was also hurt when businesses cut their stockpiles as managers worried they might not be able to sell all of their goods.

An economic expert at Bankrate.com says businesses are likely to face less political uncertainty in January, February, and March, and the economy is poised to resume slow growth.  In an interview with VOA, Greg McBride says with fewer worries, businesses are more likely to stock up on goods to sell, which will give the economy a boost.

The report said overall growth for 2012 was 2.2 percent, a bit better than the prior year.

You May Like

Photogallery Oxfam: Ebola Could Be 'Disaster of Our Generation'

Meanwhile, Fidel Castro, the former leader of Cuba, says the Caribbean island nation will 'gladly cooperate' with the US in the fight against Ebola in West Africa More

Multimedia Kobani Fighting Sends 400,000 Refugees to Turkey

Refugees receive help from Turkish authorities and individuals, but say much more is needed More

India’s Ruling Nationalist Party Makes Gains in Regional Elections

Bharatiya Janata Party’s huge margin over its rivals puts it on course to form governments in the northern Haryana and western Maharashtra states More

This forum has been closed.
Comment Sorting
Comments
     
by: FirozaliA.Mulla DBA from: Dar-Es-Salaam Tanzania
January 30, 2013 3:16 PM
The US economy shrank 0.1 per cent at an annualised rate in the fourth quarter of 2012, rattling financial markets as one-off factors overwhelmed resilience in underlying demand. Much of the fall in gross domestic product was due to a big reversal in business inventories and a plunge in federal defence spending – both highly volatile – which each knocked 1.3 percentage points off growth. That suggests the underlying economy remains on a weak but stable growth path of 1-2 per cent. But the first reported decline in the US economy since the end of the recession in 2009 is a blow to confidence and highlights the uncertainty caused by fiscal policy. Market expectations were for a rise of 1.1 per cent. Consumption grew by 2.2 per cent at an annualised rate, adding 1.5 percentage points to growth, while business investment shrugged off fiscal cliff concerns to rise by an annualised 8.4 per cent, and housing investment rose by an annualised 15.3 per cent.



Those numbers pointed to healthy underlying demand. “Frankly, this is the best looking contraction in GDP you’ll ever see,” said Paul Ashworth, chief US economist at Capital Economics in Toronto. “First-quarter GDP growth is going to be pretty weak because of the expiry of the payroll tax cut. But there is nothing in these figures to change our view that US GDP growth will accelerate as this year goes on,” he said. The weakness came from two categories that are notorious for their volatility. Inventory growth – which over the long run should average out to roughly zero – had added 0.7 percentage points to gross domestic product in the third quarter and defence spending had added 0.6 percentage That suggests a better guide to the underlying state of the economy is to look at the fourth quarter alongside third-quarter growth of 3.1 per cent – ending up with a mediocre, but steady, average of 1.5 per cent. “While inventories and government are what are most likely to catch the market’s eye it is hard to put a particularly positive spin on such a weak headline,” said David Semmens, senior US economist at Standard Chartered. “It will be important for Friday’s employment number to settle people’s nerves that this [the GDP figures] reflect the fiscal cliff concerns rather than a genuine stalling of the US economy.” There was an encouraging sign for Friday’s payrolls report when ADP, the private payrolls processing company, said on Wednesday morning that its survey found 192,000 new jobs created in December. Job growth was particularly strong at small businesses, it reported. The effects of the protracted negotiations to avoid the fiscal cliff – as government spending cuts and tax rises were due to be triggered by year-end – were in evidence in a large rise of 6.8 per cent in disposable incomes in the fourth quarter. Given modest wage and jobs growth, the most likely explanation was that wealthier consumers brought income and capital gains forward into 2012, in the expectation that tax rates were about to rise. Points. Both were more than reversed in the following three months. This was expected as there are feuds with the immigration and the gun laws these have to be polished yet I thank you Firozali A.Mulla DBA









Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Exclusive: American Joins Kurds' Anti-IS Fighti
X
Zana Omer
October 18, 2014 6:37 PM
The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.
Video

Video Syrian Defector Leaks Shocking Photos of Torture Victims

Shocking photographs purporting to show Syrian torture victims are on display at the U.S. Holocaust Memorial Museum in Washington. The museum says the graphic images are among thousands of photographs recently smuggled out of Syria by a military policeman-turned-defector. As VOA reporter Julie Taboh reports, the museum says the photos provide further evidence of atrocities committed by the government of Syrian President Bashar al-Assad against its own people.
Video

Video Drought-Stricken California Considers Upgrading Water System

A three-year drought in California is causing a water shortage that is being felt on farms and cities throughout the state. As VOA's Mike O’Sullivan reports, water experts, consumers and farmers say California needs to make changes to cope with an uncertain future.
Video

Video TechShop Puts High-tech Dreams Within Reach

Square, a business app and card reader, makes it possible to do credit card transactions through cell phones. But what made Square possible? VOA’s Adrianna Zhang and Enming Liu have the answer.
Video

Video Church for Atheists Goes Global

Atheists, by definition, do not believe in God. So they should have no need of a church. But two years ago, a pair of British stand-up comedians decided to create one. Sanderson Jones and Pippa Evans told the BBC they envisioned “something like church but without God". Their “Sunday Assembly” movement has grown from a single congregation in London to dozens of churches around the world. Reporter Mike Osborne visited with the members of a Sunday Assembly that now meets regularly in Nashville.
Video

Video Robot Locates Unexploded Underwater Mines

Many educators believe that hands-on experience is the best way to learn. Proving that the method works is a project developed by a group of students at the Stevens Institute of Technology, in Hoboken, New Jersey. They rose up to a challenge posted by the U.S. Department of Defense and successfully designed and built an underwater robot for locating submerged unexploded ordnance. VOA’s George Putic reports.
Video

Video Liberia's JFK Hospital Reopens After Temporary Ebola Exposure

JFK Hospital is Liberia’s largest and one of its oldest medical facilities. The hospital had to close temporarily following the deaths of two leading doctors from Ebola. It is now getting back on its feet, with the maternity ward being the first section to reopen. Benno Muchler has more for VOA News from Monrovia.
Video

Video Hong Kong Protests Expose Generation Gap

Most of the tens of thousands of protesters in Hong Kong are students seeking democracy. Idealistic youths say while the older generation worries about the present, they are fighting for the territory's future. VOA's Daniel Schearf reports from Hong Kong.
Video

Video Liberians Living in US Struggle From Afar as Ebola Ravages Homeland

More than 8,000 Liberians live in New York City, more than in any other city outside of Liberia itself. As VOA’s Bernard Shusman reports, with the Ebola virus ravaging their homeland, there is no peace of mind for these New Yorkers.
Video

Video Kurds See War-Ravaged Kobani As Political, Emotional Heartland

Intense fighting is continuing between Islamic State militants -- also known as ISIS or ISIL -- and Kurdish forces around the Syrian town of Kobani, on the Turkish border. The U.S. said it carried out at least nine airstrikes against Islamic State positions Friday. Meanwhile the U.N. has warned that hundreds of civilians would be massacred if the town falls to the militants. Henry Ridgwell looks at the strategic significance of the city.

All About America

AppleAndroid