WASHINGTON: The economic rebound in the United States in the past quarter turned out to be slower than first thought, one of the reasons unemployment is likely to stay stubbornly high this year.
The economy grew at a 3 per cent annual rate from January to March, the Commerce Department said yesterday. That was slightly weaker than an initial estimate of 3.2 per cent growth a month ago.
The new reading, based on more complete information, also fell short of economists' forecast for stronger growth of 3.4 per cent.
The reasons for the downgrade: consumers spent less than first estimated. The same goes for business spending on equipment and software, while the nation's trade deficit was a bigger drag on economic activity.
Normally, growth in the 3 per cent range would be considered healthy. But the country is coming out of the longest and deepest recession since the Great Depression, meaning economic growth needs to be two or three times the current pace to make a big dent in the 9.9 per cent unemployment rate.
Labour Department figures yesterday showed more Americans than forecast filed applications for unemployment benefits last week, indicating redundancies persist even as the economy rebounds and employment rises. Initial jobless claims fell by 14,000 to 460,000 in the week ended May 22.
ASSOCIATED PRESS, BLOOMBERG
Source: Straits Times, 28 May 2010