CBNNews.com - The economy showed minor growth in the spring quarter, thanks to a boom in exports and a small boost to consumer spending from tax rebates, officials said.
The Commerce Department reported Thursday that gross domestic product, or GDP, increased at an annual rate of 1.9 percent in the April-to-June period.
That was an improvement over the 0.9 percent growth in the first quarter of 2008.
However, growth was down for the previous three years. The latest figures show that the economy contracted by 0.2 percent in the final three months of 2007.
That contraction has some still speculating about whether the economy is in recession.
The report revealed that without the 9.2 percent jump in exports and 6.6 drop in imports in the last quarter, the economy also would have contracted by 0.5 percent.
Shifting Consumer Spending
Consumer spending is normally about 70 percent of U.S. growth, but American consumers have been displaced in recent months by strong consumer demand in the world for exports.
Many economists expect growth to sink again in the second half of the year as the tax stimulus ends and consumers worry about high gas prices and falling home prices.
"For the next two or three months, the tax rebates are likely to support consumer spending," said Harm Bandholz, economist at Unicredit Markets.
"But once the impact of the fiscal stimulus fizzles out, the underlying problems of U.S. households will resurface; rising unemployment, falling house prices and high debt burdens," he said. "We expect consumer spending to rise a mere 0.5 percent in the second half of the year."
In the last quarter, rebate checks lifted U.S. consumer spending to a 1.5 percent growth pace from 0.9 percent in the first quarter, which had been the smallest gain in 13 years.
Spending on furniture and household appliances went up, while people cut spending on cars.
Inflation flared to a 4.2 percent rate from 3.6 percent in the first quarter, driven by record increases in oil and gasoline prices.
Excluding energy, however, inflation remained tame at 2.2 percent, the report showed.
Source: The Associated Press, Washington Times