Black and White Program

Revised GDP proves negative

September 28th, 2012 by Black and White Program Staff

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A downward revision to the U.S. economic growth rate has analysts presenting a skeptical and cautious outlook for upcoming near term quarters.  The GDP grew at a sluggish 1.3 percent annual rate in the April-June quarter, revised and lowered from a previous estimate of 1.7 percent. The anemic rate was affected by the severe drought that reduced farm production in the midwest and by some analysts’ reports, represented as much as half of the downward trend. Other contributing factors included slower growth in consumer spending and exports. As the farm sector recovers, it could also provide a relevant boost to future GDP levels.  In the first quarter of the year, growth was reported at a 2 percent rate. Most economists state that growth below 2 percent is not significant enough to lower unemployment, which was reportedly 8.1 percent in August. Many eyes are on the Federal Reserve’s plan to buy $40 billion of mortgage-backed securities a month until there is “substantial” improvement in the job market and a lowering of unemployment rates, as well as to stimulate the housing market, providing a further boost to the economy.

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