GDP Report: Rate of U.S. Economic Growth Slows To 2.2%
Economists had been anticipating growth of at least 2.5 percent, surveys show. In the last three months of last year, the economy grew at a rate of 3 percent, according to the Commerce Department.
The report of gross domestic product, the value of all goods and services produced in the United States, is one of the most closely watched measures of the economy, particularly in an election year. Friday’s announcement – of growth, but not rapid growth – will likely be addressed by both presidential campaigns.
“Following a strong performance at the end of 2011, this most recent growth rate may be called modest, at best,” said Kathy Bostjancic, director for macroeconomic analysis, at The Conference Board.
Wall Street traders appeared slightly pleased by the number on opening bell. The Dow Jones Industrial Average rose nearly 0.22 percent after the news.
Economists remain divided over the strength of the recovery, and on Wednesday, Federal Reserve Chairman Ben S. Bernanke defended the central bank’s wait-and-see approach to the economy, announcing that the Fed would take no new actions to boost growth and would keep interest rates near zero into 2014.
What expansion there was largely came from an increase in household purchases, which account for about 70 percent of the economy. Consumer spending rose 2.9 percent, beating expectations.
“Despite consumer anxiety over gas and food prices that are stretching household budgets, consumers are still spending,” Bostjancic said.
The budget woes at all levels of government continue to put downward pressure on the economy, according to the report. Federal government spending dropped 5.6 percent; spending by state and local government dropped by 1.2 percent. Washington Post