US economy grew by 1.7% in second quarter as government eases cuts

[muriel_volestrangler]

Source: AP/Guardian

The US economy grew from April through June at a seasonally adjusted annual rate of 1.7%, as businesses spent more and the federal government cut less.

The Commerce Department said on Wednesday that growth improved from a sluggish 1.1% in the January-March quarter, which was revised from an initial 1.8% rate. The pick-up in growth was surprising as most economists predicted a far weaker second quarter. And it suggests the economy could accelerate later this year as businesses step up spending and the drag from steep government cuts fade.

Businesses increased their spending by 4.6% in the second quarter after cutting by the same amount in the previous quarter. Spending on home construction grew 13.4%, in line with the previous quarter. At the same time, the federal government cut spending only 1.5% after an 8.4% plunge in the first quarter. And state and local governments increased spending for the first time in a year. Consumers increased their spending more slowly in the second quarter. And a surge in imports reduced growth by the most in three years.

Economists are hopeful that growth could improve to around 2.5% in the third and fourth quarters.

Read more: http://www.theguardian.com/business/2013/jul/31/commerce-department-economy-second-quarter

[bhikkhu]

1. Very good news. From a climate change perspective

growth is not good, as economic activity is inherently linked to greenhouse gas emissions. But, on the other hand, without some growth we can't create new jobs and alleviate poverty. 1-2% is a good compromise, and that's where we've held steady for about 4 years now.

[Swede Atlanta]

2. Agree with you on the climate change perspective but....

We need, arguably, better growth to reduce unemployment.

I qualify that with "arguably".....I think things have changed recently. I think growth can and will occur without any impact on unemployment....the wealthy have their money and continue to rake it in so they spend, the rest spend on the minimal requirements of life and that too sustains a certain level of economic activity.

It used to be accepted that growth in the economy drove employment and prosperity. I think the powers that be actually like the status quo...corporations (their paymasters) get cheap labor with little regulation, the rich get richer and fuck the environment.

[former9thward]

3. It is not a good compromise.

Growth rates at these levels will not bring down unemployment. Need between 3-4% to do that.

[bhikkhu]

6. 3-4% is bubble-level

then it just comes crashing back down again.

Though of course we could do better with what we have, and even stable economies can create jobs. If resources were allocated more equally, it would be no problem.

[former9thward]

7. From 1945 to 2000 the GDP averaged a 3.5% growth.

I don't think that whole period was a bubble.

[bhikkhu]

8. Ok - got me there

the basic driver of any economy is energy, however, and without an abundant cheap supply of energy, its much easier to blow artificial bubbles than it is to create actual economic growth. The basic difference between "then" and "now" is the quality and quantity of the energy we have available.

But those are statements that would require on bookloads of data to support...I could easily be wrong.

[On the Road]

9. 3% is Low for a Recovery

It's closer to the long-term US average.

Usually steep economic plunges result in a few quarters of 4-5% growth when they stabilize. That may still happen, but it is taking a while.

[UrbScotty]

4. Funny how that works - fewer cuts = a stronger economy (nt)

[jtuck004]

5. The new math didn't hurt either. They revised the numbers upwards by accounting

for R&D as an investment, not an expense. They also went back a numbers of years and added various amounts in. Last year, for example, was raised by .4.

R&D is an investment, so this it's about time they did this, but a fair amount of that R&D, especially in mfg, goes toward finding ways to replace workers with machines, which can't be ignored. Well, it can, just probably shouldn't be. But some people's standards are lower than others.