U.S. economy expands 2.5% in first quarter Growth misses forecast as government spending falls, imports soar
http://www.marketwatch.com/story/us-economy-expands-25-in-first-quarter-2013-04-26
The U.S. ramped up growth in the first three
months of 2013 as consumer spending surged, but the details of the
latest checkup on the nation’s health underscored the fragile nature of
the economic recovery.
Gross domestic product expanded at a 2.5% annual rate in the first
quarter, up from a paltry 0.4% at the end of 2012, the government said
Friday. Businesses rebuilt inventories at a faster clip and consumers
boosted spending by the most in more than two years despite an increase
in personal taxes.
Yet, government spending sank again — the back-to-back drop in military
outlays is the steepest since the 1950s — and imports surged in part
because of a spike in oil prices. Both of those factors weighed on U.S. growth in the first quarter and
GDP fell short of the 3.2% forecast of economists polled by MarketWatch.
In recent market action, U.S. stocks moved slightly higher, and Treasury prices fell.The stage has also been set for a more sluggish second quarter.
Although the growth rate has declined during this quarter, the S&P 500 companies have exceeded their growth projections by nearly double showing an increase in strength of the US businesses. The reduction in military spending could also be a good omen for the economy moving forward. During the Truman years, the military budget was drastically cut in response to the high spending during WWII. During those years, the economy was very healthy.
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