Saturday, July 31, 2010

US economic growth slows to 2.4%

Source: Press TV§ionid=3510203

The US economic recovery has lost momentum as growth slowed dramatically to a 2.4 percent annual rate in the second quarter, the US Commerce Department announced.

The gross domestic product growth for the April-to-June quarter reflects a larger trade deficit and more unemployment compared to the first quarter, when the figure was revised to 3.7 percent, according to a US Commerce Department report issued on Friday.

In a separate report, the Commerce Department said that the recession was deeper than previously estimated and the recovery has been losing power for two straight quarters.

There are growing fears about the US economic recovery, particularly concerning the country's high unemployment rate of 9.5 percent.

A bleak conclusion of analysts suggests the US economic recovery is so slow that employers' unwillingness to hire workforce could bring the unemployment rate back to double digits.

Uncertain about the strength of the recovery, companies are sitting on record piles of cash, loath to use the money to hire new workers and expand operations.

Meanwhile, the International Monetary Fund has urged the US to take more decisive action to achieve stable growth that limits risks of adverse international spillovers.

The IMF also says the US unemployment rate will likely remain over 9.5 percent in 2011.

The Congress is under pressure to pass more stimulus measures to speed the recovery. Republicans and some Democrats, however, have blocked additional spending because of their concerns about the size of the deficit.

US President Barack Obama has clashed with Republicans over the need for government to help the ailing economy, making spending one of the most fiercely fought political battles in the US capital.

Obama's critics accuse the president of putting the future of citizens at risk by causing US debt to balloon through ineffective stimulus spending.

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