Source - http://www.bloomberg.com/
By - Shobhana Chandra
Category - Accommodation In Santa Clarita
Posted By - Hampton Inn Santa Clarita
By - Shobhana Chandra
Category - Accommodation In Santa Clarita
Posted By - Hampton Inn Santa Clarita
 |
| Accommodation In Santa Clarita |
Growth in the world’s largest economy was less than originally estimated in the first quarter as an increase in the U.S. payroll tax took a bigger bite out of consumer spending than previously calculated.
Gross domestic product grew at a 1.8 percent annualized rate from January through March, down from a prior reading of 2.4 percent, Commerce Department data showed today in Washington. Household purchases were trimmed to a 2.6 percent advance -- still the fastest in two years -- from the 3.4 percent gain estimated last month.
Americans cut back on services from vacations to legal advice as the two percentage-point increase in the payroll tax caused incomes to drop by the most in more than four years. At the same time, an improving labor market and rising home prices are underpinning consumer confidence, one reason economists project growth will pick up in the second half of the year.
“You’re not seeing a big pullback in consumer spending, it is just weaker than previously estimated,” said Daniel Silver, an economist at JPMorgan Chase & Co. in New York. “The housing recovery will continue to push forward. Overall growth is going to be stronger in the second half.”
Stocks and Treasury securities rallied on speculation the weaker-than-projected growth reading will prompt Federal Reserve policy makers to delay reducing bond purchases. The Standard & Poor’s 500 Index rose 1 percent to 1,603.26 at the close in New York. The yield on the benchmark 10-year note fell to 2.54 percent from 2.61 percent late yesterday.
Financial System
Elsewhere, the Bank of England today said lenders are vulnerable to an abrupt increase in long-term interest rates as it warned confidence in the financial system remains fragile. The central bank ordered a review of banks’ exposure to interest-rate risk, which it said is not properly understood.
The U.S. government’s GDP estimate is the third and final one for the quarter. The 0.6 percentage-point reduction was the biggest for a final reading of GDP since the figure for the third quarter of 2009, which was lowered by the same amount.
The median forecast of 82 economists surveyed by Bloomberg called for a 2.4 percent rise in first-quarter GDP, the same as the Commerce Department previously estimated. The economy grew at a 0.4 percent pace in the last three months of 2012.
The downward revision was centered in consumer spending on services, with the updated figures showing a 1.7 percent gain compared with a prior estimate of 3.1 percent. Outlays in the category that includes tourism, legal help and personal care items such as haircuts, dropped in the first quarter from the previous three months. Spending on health-care services grew at a slower pace than previously projected.
Gross domestic product grew at a 1.8 percent annualized rate from January through March, down from a prior reading of 2.4 percent, Commerce Department data showed today in Washington. Household purchases were trimmed to a 2.6 percent advance -- still the fastest in two years -- from the 3.4 percent gain estimated last month.
Americans cut back on services from vacations to legal advice as the two percentage-point increase in the payroll tax caused incomes to drop by the most in more than four years. At the same time, an improving labor market and rising home prices are underpinning consumer confidence, one reason economists project growth will pick up in the second half of the year.
“You’re not seeing a big pullback in consumer spending, it is just weaker than previously estimated,” said Daniel Silver, an economist at JPMorgan Chase & Co. in New York. “The housing recovery will continue to push forward. Overall growth is going to be stronger in the second half.”
Stocks and Treasury securities rallied on speculation the weaker-than-projected growth reading will prompt Federal Reserve policy makers to delay reducing bond purchases. The Standard & Poor’s 500 Index rose 1 percent to 1,603.26 at the close in New York. The yield on the benchmark 10-year note fell to 2.54 percent from 2.61 percent late yesterday.
Financial System
Elsewhere, the Bank of England today said lenders are vulnerable to an abrupt increase in long-term interest rates as it warned confidence in the financial system remains fragile. The central bank ordered a review of banks’ exposure to interest-rate risk, which it said is not properly understood.
The U.S. government’s GDP estimate is the third and final one for the quarter. The 0.6 percentage-point reduction was the biggest for a final reading of GDP since the figure for the third quarter of 2009, which was lowered by the same amount.
The median forecast of 82 economists surveyed by Bloomberg called for a 2.4 percent rise in first-quarter GDP, the same as the Commerce Department previously estimated. The economy grew at a 0.4 percent pace in the last three months of 2012.
The downward revision was centered in consumer spending on services, with the updated figures showing a 1.7 percent gain compared with a prior estimate of 3.1 percent. Outlays in the category that includes tourism, legal help and personal care items such as haircuts, dropped in the first quarter from the previous three months. Spending on health-care services grew at a slower pace than previously projected.
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