04-22-2018  6:32 pm      •     
The Skanner Report
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NEWS BRIEFS

Think & Drink with Rinku Sen and Mary Li

Event takes place Wednesday, May 16, at Alberta Rose Theater ...

April 24 is Voter Registration Deadline for May 15 Primary Election

Tuesday, April 24, is voter registration and party choice deadline for May 15 Primary Election ...

Portland Libraries Celebrate National Poetry Month

April poetry events and recommended reading from Multnomah County libraries ...

PCRI Launches the Pathway 1000 Implementation Plan

Pathway 1000 a bold and ambitious 10-year displacement mitigation initiative ...

AG Rosenblum Launches New Resource on Oregon’s New Gun Safety Laws

One-page handout aims to educate Oregonians about the new law ...

U.S. & WORLD NEWS

OPINION

The Skanner News Endorsements for May 2018 Elections

Read The Skanner News' endorsements for Multnomah County, Portland City Council and more ...

Will HUD Secretary Ben Carson Enforce the Fair Housing Act?

Julianne Malveaux questions HUD Secretary Ben Carson’s ability to enforce the Fair Housing Act ...

Waiting While Black in Philadelphia Can Get You Arrested

Reggie Shuford on the daily indignities African-Americans face in Philadelphia and around the country ...

Black People Must Vote or Reap the Consequences

Jeffrey Boney on the importance of voting in the Black community ...

AFRICAN AMERICANS IN THE NEWS

ENTERTAINMENT

Christopher S. Rugaber AP Economics Writer

WASHINGTON (AP) -- The economy expanded at meager 1.3 percent annual rate in the spring after scarcely growing at all in the first three months of the year, the Commerce Department said Friday.

The combined growth for the first six months of the year was the weakest since the recession ended two years ago. The government revised the January-March figures to show just 0.4 percent growth - down sharply from its previous estimate of 1.9 percent.

High gas prices and scant income gains have forced Americans to pull back sharply on spending. Consumer spending only increased 0.1 percent in the April-June quarter, the smallest gain in two years. Government spending fell for the third straight quarter.

Stocks dropped in early trading, then regained some lost ground. The Dow Jones industrial average fell 58 points, and broader indexes also declined.

"These numbers are extremely bad," said Nigel Gault, an economist at IHS Global Insight. "The momentum in the economy is clearly very weak."

The sharp slowdown means the economy will likely grow this year at a weaker pace than last year. Economists don't expect growth to pick up enough in the second half of the year to lower the unemployment rate, which rose to 9.2 percent last month.

The weaker data will also add pressure to already-tense negotiations between President Barack Obama and lawmakers over increasing the debt limit. Any deal will likely include deep cuts in government spending. That could slow growth further in the short term.

But if Congress fails to raise the debt limit and the government defaults, financial markets could fall and interest rates could rise.

Obama cited the dismal growth figures Friday as a reason for lawmakers to reach a solution.

"On a day when we've been reminded how fragile the economy is, this is a burden we can lift ourselves," Obama said.

Economists have said the negotiations have injected a large amount of uncertainty into the frail recovery. Some businesses are holding back on hiring and expansion plans.

"It is hard to see the economy getting much stronger," Paul Dales, an economist at Capital Economics, said in a research note. "In fact, if the debt ceiling is not raised ... we could well have another recession on our hands."

Earlier this year, economists thought that a Social Security payroll tax cut would accelerate growth in 2011. But most of that money has gone to pay for higher gas prices.

Consumer spending on long-lasting manufactured goods, such as cars and appliances, fell 4.4 percent. Many auto dealers reported shortages of popular models after Japan's March 11 earthquake, cutting into auto sales.

Employers have pulled back on hiring after seeing less spending by consumers. The economy added just 18,000 net jobs in June, the fewest in nine months and a steep drop from the average of 215,000 jobs per month added from February through April.

Those who have jobs are seeing little gain in their incomes. After-tax incomes, adjusted for inflation, rose only 0.7 percent, matching the previous quarter and the weakest since the recession ended.

The drop in government spending was driven by cuts at the state and local level. Those governments have slashed spending in seven of the eight quarters since the official end of the recession.

Business investment, which has been a driver of growth during the recovery, also faltered this spring. Spending on equipment and software grew 5.7 percent in the second quarter, down from the first quarter's 8.7 percent pace and below the double-digit gains posted last year.

The government also revised data going back to 2003. The data show the recession was even worse than previously thought. The economy shrank 5.1 percent during the recession, which lasted from December 2007 through June 2009, compared to the earlier estimate of 4.1 percent. Both figures represent the worst downturn since World War II.

"The depth of the recession is now clearly so much deeper," Gault said.

Friday's report is the first of three estimates the government releases of the gross domestic product, which measures everything from restaurant meals to auto production to government spending.

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