News / Economy

US 2nd Quarter GDP - Lackluster, But Better Than Expected

US Second Quarter GDP - Lackluster, But Better Than Expectedi
X
August 01, 2013 10:40 PM
The world’s largest economy grew only slightly in the second quarter, expanding at an annualized rate of 1.7 percent between April and June. Despite the lackluster growth and a downward revision in U.S. gross domestic output in the first quarter, the GDP numbers were still better than some analysts expected. But the data also suggest the economy is still not growing fast enough for the central bank to change course on monetary policies that have kept interest rates at record lows. VOA's Mil Arcega has more.
TEXT SIZE - +
The world’s largest economy grew only slightly in the second quarter, expanding at an annualized rate of 1.7 percent between April and June.  Despite the lackluster growth and a downward revision in U.S. gross domestic output in the first quarter, the GDP numbers were still better than some analysts expected.  But the data also suggest the economy is still not growing fast enough for the central bank to change course on monetary policies that have kept interest rates at record lows.
 
GDP - the broadest measure of the U.S. economy - confirms continuing slow but steady growth - led by better than expected consumer spending and a much improved housing market.  Economists say it shows an economy barely in recovery - but one resilient enough to absorb deep government spending cuts enacted by Congress earlier this year.

Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics in Washington, D.C., says the numbers took him by surprise.
 
"I’m really amazed at how well we’re doing given the sequester (government spending cuts) and the big tax increases we had this year.  Although I was predicting a year ago that if we could have avoided the sequester and the tax increases this year, we could have kicked that can down the road another year or two (postponed the spending cuts and tax increases) - that we might be growing over three percent, almost four percent this year," says Gagnon. 
 
The U.S. central bank has said as much, warning Congress that a continuing focus on government austerity could further slow the recovery.

Anthony Valeri, at LPL Financial, says weak growth in the first half of 2013 means the Federal Reserve, as the U.S. central bank is referred to, is unlikely to scale back too quickly on its easy money policies.
 
“I think [Federal Reserve Chairman Ben] Bernanke and company made it pretty clear that they are still very dovish (in favor of low interest rates). They are in no rush to remove accommodation (quantitative easing policy) and that they are in no rush, more importantly, to raise interest rates,” says Valeri.
 
The Federal Reserve has been purchasing $85 billion a month in bonds and mortgage-backed securities to keep long-term interest rates at record lows. Experts say ending the program too soon could stall the housing recovery. 

Economist Ken Simonson says that would hurt employment.
 
“Clearly, over time, more people would find they don’t qualify for a mortgage if rates do keep rising, so that could put a lid on (bring to a halt) how high home sales and home construction go.”
 
Economists expect more clarity on the U.S. economic picture when the monthly jobs report comes out August 2. Recent economic surveys suggest companies are still hiring, and that unemployment likely fell last month from 7.6 to 7.5 percent.

You May Like

Multimedia Anti-Keystone XL Protests Continue

Demonstrators are worried about pipeline's effect on climate change, their traditional way of life, health and safety More

Thailand's Political Power Struggle Continues

Court gave Prime Minister Yingluck Shinawatra until May 2 to prepare her defense over abuse of power charges but uncertainty remains over election timing More

Malaysia Plane Search Tests Limits of Ocean Mapping Technology

Expert tells VOA existing equipment’s maximum operating depth is around 6 kilometers as operation continues on ocean bed for any trace of MH370 More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Pet Kangaroo Helps Spread Environmental Messagei
X
Penelope Poulou
April 22, 2014 5:53 PM
Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pet Kangaroo Helps Spread Environmental Message

Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pro-Russian Separatists Plan 'Federalization Referendum' in Eastern Ukraine

Pro-Russian separatists in eastern Ukraine say they plan to move forward next month with a referendum vote for greater autonomy, despite the Geneva agreement reached with Russia, the U.S. and Ukraine to end the political conflict. VOA's Brian Padden reports from the city of Donetsk in Eastern Ukraine.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video International Students Learn Film Production in World's Movie Capital

Hollywood - which is part of Los Angeles - is the movie capital of the world, and many aspiring filmmakers go there in hopes of breaking into the movie business. Mike O'Sullivan reports that regional universities are also a magnet for students who hope to become producers or directors.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.