PLANO, Texas - The economy grew at a 1.9% pace during the second quarter, according to Southwest Corporate’s Brian Turner, who noted the growth was tempered by the continued housing slowdown and higher energy costs but buoyed by tax rebates.
Turner said the most recent reports revised fourth quarter growth downward from 0.6% increase to a 0.2% contraction. First-quarter figures were also revised downward to show a 0.9% growth rate compared with a prior estimate of 1%. The report is the first for the second quarter and will be revised again in August and September.
“The report comes on the heels of falling job growth, rising unemployment claims and teetering consumer spending,” Turner said. “The housing slowdown continues to dilute economic growth as residential construction dropped at a 15.6% pace detracting 0.6 percent from GDP, albeit the smallest reduction in more than two years.”
Other findings include:
* Consumer spending grew by a modest 1.5%. “As the effects of the tax rebates fade, growth expectation for the second half of the year will still be moderate,” Turner suggested. “This gives the impression that a portion of the rebates might be going to pay for higher gasoline and food costs.”
* The Fed’s inflation gauge rose at a 2.1% rate during the quarter, slightly down from the previous period. “Of course, this gauge excludes most commodity-based prices, namely food and energy,” he said. “The reports also validate the Fed’s statement that there are still ‘significant downside risks to the outlook for growth’ and ‘upside risks to the inflation outlook have intensified.’”
The slower growth is reflected in CU data showing first quarter loan growth at a modest 1.1% quarter-over-quarter.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
