Monday, June 4, 2012

US Economy growing slower than predicted

Half Bridge Business News

The US Economy has grown at the rate of 1.9% in the first quarter of the current year, as opposed to 2.2% announced earlier. The downward revision has been made due to:

a.      a downward revision in consumer spending estimates,
b.      an increase in imports,
c.      an decrease in corporate after-tax-profits,
d.      decrease in government spending

The after tax profits have fallen significantly by 4.1%, showing the biggest decline in three years. Consumer spending has actually increased by 2.7%, as opposed to 2.9% announced earlier. The government has also reduced its spending from 3.9% to 3%.

Future Growth

Analysts are expecting the growth rate for the second quarter of 2012 to increase to an annual rate 2.5%, a reduction from the 3% growth rate achieved in the last quarter of 2011. The US economy is expected to improve the growth rate in the coming months, which might take the annual growth rate for 2012 to 2.5%, an improvement from the 1.7% growth rate of 2011.

Better Performing Sectors

There is some good news from some sectors that are performing better than others and even beating the analysts’ forecasts. Clothing firms such as Limited Brands (Victoria’s Secret), Target, Gap and TJX Cos (TJX and TJMaxx) are reporting increase in sales. 

Your comments and feedback are always appreciated
Sarfaraz Khan