U.S. economy revved up, but it’s probably temporary

The U.S. economy accelerated at the beginning of the year, but don’t get too excited. Economists aren’t very optimistic that trend will continue in the months ahead.

Gross domestic product — the broadest measure of economic output — rose at a 2.5% annual pace in the first three months of the year, driven largely by a pick-up in consumer spending on services, the Commerce Department said.

Consumer spending, which alone accounts for roughly two thirds of GDP, rose at a 3.2% annual pace.

That boost largely came from spending on services, including spending on housing and utilities, which rebounded after slumping following Hurricane Sandy in the prior quarter. This March was also the coldest since 2002, a weather patten that boosted the demand for heating.

Meanwhile, cuts in government spending dragged on growth in the first quarter and are likely to drag on the economy through the rest of the year.

Economic growth isn’t likely to be as strong in the second quarter. Other economic data already shows the economy may have lost some steam starting in March.

Job growth slowed, retail sales slumped and the manufacturing sector showed signs of weakness.

The-CNN-Wire/Atlanta/+1-404-827-WIRE(9473)
™ & © 2012 Cable News Network, Inc., a Time Warner Company. All rights reserved.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

2 comments

Follow

Get every new post delivered to your Inbox.

Join 628 other followers