Less Growth, More Jobs
By Isaac Cohen*
For the third consecutive year, the US economy stalled during the first quarter, growing at an annual rate of only 0.5 percent, according to figures subject to revision released by the Department of Commerce. Confirming the experience of the past two years, the Federal Reserve Bank of Atlanta forecasts a rebound to 1.8 percent for this year’s second quarter. Additionally, the same growth rate of the last two years, of 2.4 percent, can be expected for this year as a whole. By contrast, job creation has been vigorous, with the unemployment rate at 5 percent. Employment figures for April will be released by the Labor Department at the end of this week
The slowdown was acknowledged by the central bank, as it decided to leave interest rates unchanged. The statement, issued at the conclusion last week of the Federal Open Market Committee meeting, said: “labor market conditions have improved further even as growth in economic activity appears to have slowed.”
A decrease of 25 percent in private investment, from the previous quarter, less exports and flat consumer spending, all contributed to the slowdown, while increases in housing and state and local government spending prevented a deeper fall.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.