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U.S. Economy Grows but at less than Stellar Pace

Posted on 29. Apr, 2013 by in Business, Business Featured

The sluggish recovery in the U.S. keeps catching a break, but not a good one

April 28, 2013 - The sluggish recovery in the U.S. keeps catching a break, but not a good one. The continual spending cuts by the federal government and the slowdown in investments by businesses thwarted any hope for a stronger growth in the economy during the first three months of 2013.

During the first quarter of this year, the economy in the U.S. grew by an annualized rate of 2.5%, said a report from the Commerce Department on Friday.

The improvement was substantial from the 0.4% increase during the fourth quarter of 2012, when smaller stockpiling by businesses and deep cuts in the defense budget slashed any growth. Even though the growth was higher than the previous quarter, it was still below the average set by market analysts at 3%.

As was expected, farms as well as other businesses filled their inventories to start the year, which accounted for a large part of the acceleration of the nation’s GDP, or the total value of goods and services, which were produced in the U.S.

More than two-thirds of the U.S. economy is made up of consumer spending, which was robust during the quarter. Even though taxes cut into workers paychecks, people continued to buy more vehicles and other long term products.

Spending for services, which includes utilities, healthcare and insurance all increased during the quarter at its fastest pace in 8 years. The private economy remains tough, but the public sector has proven to be a bigger drag on the economy than was previously feared.

Following a drop in the fourth quarter of an annualized rate of more than 7%, government investment and spending fell by 4.1% during the first quarter of 2013. Expenditures in National defense fell 11.5% during the first three months of 2013 after plummeting by 22.1% during the last quarter of 2012.

 

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