EconomicCrisis.US

The American economy has recently slowed dramatically, and the probability of another economic downturn increases with each new round of data. This is a sharp change from the economic situation at the end of last year – and represents a return to the very weak pace of expansion since the recovery began in the summer of 2009.

Economic growth in the United States during the first three quarters of 2010 was not only slow, but was also dominated by inventory accumulation rather than sales to consumers or other forms of final sales. The last quarter of 2010 brought a welcome change, with consumer spending rising at a 4% annual rate, enough to increase total real GDP by 3.1% from the third quarter to the fourth. The economy seemed to have escaped its dependence on inventory accumulation.
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A handful of factors threaten the strength of the U.S. economic recovery this year, like U.S. government spending and high unemployment, leading many to wonder just how well the country’s economy will fare in 2011.

The U.S. Commerce Department reported last month that U.S. gross domestic product (GDP) growth slowed in 2011′s first quarter to 1.8%, down from 3.1% at the end of 2010. High gasoline prices and rough winter weather combined to drag down GDP.

The news came a day after U.S. Federal Reserve Chairman Ben Bernanke held the first-ever Fed press conference and said he expects the U.S. economy to grow at a rate of 3.1% to 3.3% this year (down from the 3.4% to 3.9% previously projected).
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Last month, the feds said that in the fourth quarter of 2010 the U.S. economy grew 3.1 percent, up from 2.8 percent as initially thought. Feeling any richer? If you’re like most people, you probably find it hard to say. That’s because even per capita measures of GDP are a poor measure of how someone is faring economically. It doesn’t tell you how any additional income resulting from faster growth is distributed among the rich, poor and all points in between. Nor does GDP tell you if gains come from higher consumer spending on, say, handguns, as financially strapped towns and cities cut back on policing.
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Consumer spending in the U.S. rose more than forecast in February as incomes climbed, helping to bolster the expansion in the world’s largest economy.

Purchases increased 0.7 percent, the most since October, after advancing 0.3 percent the prior month, Commerce Department figures showed today in Washington. Incomes increased 0.3 percent, less than projected, and the Federal Reserve’s preferred measure of inflation accelerated.

The U.S. added jobs for the sixth consecutive month in February and the unemployment rate fell to the lowest level since April 2009, helping cushion Americans from higher food and fuel prices. Spending is contributing to the recovery, which Fed policy makers say is on a “firmer footing.”
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