According to the article, our economy probably grew at a slower pace in the first quarter. The main reason is the jump in gasoline prices caused consumers to cut back.
Gross domestic product rose at a 1.9 percent annual pace after increasing at a 3.1 percent rate in the previous three months, according to the median estimate of 66 economists surveyed by Bloomberg News before an April 28 Commerce Department report. At the same time, other data show business investment remained a pillar of the economic rebound, while home prices fell.
Federal Reserve policy makers, when they meet this week, will likely say they’ll complete the second round of stimulus worth $600 billion, as scheduled, through the end of June to help sustain the recovery. Big corporations like GEs or Apple Inc are among those benefiting from gains in spending on equipment and software, while households are feeling the pinch of higher food and fuel prices.
The GDP estimate is the first of three for the quarter, with the other releases scheduled for May and June when more information becomes available
4 comments:
I feel as if the increases in gas prices this time around (as opposed to a couple years ago) is less of a news story. Personally, I've become accustomed to high fuel prices. Despite this, this is a difficult time for gas prices to be increasing. Throughout 2011, the price of food has also been increasing substantially and now households must also deal with the fuel prices (which increase the cost of consumer goods too). I believe that as Americans become used to higher fuel prices and change their routines accordingly, it will effect the economy less and less.
I agree with Aimee - the gas price increases were so shocking the last time they happened that I think it had much more of an impact. This time, everyone can see them coming, it's happening somewhat gradually, and since we've already been here before the general outrage is a lot lower than the last time. I do think it's interesting that while we are all dreading gas being $4 per gallon, as we talked about in class the price of gasoline here in the U.S. is much lower than almost any other developed nation. It makes me wonder if we're just going to eventually reach the point where our gas prices match up with the majority of the rest of the world.
I feel that because the political reasons behind the increase in oil price is very significant, less emphasis is being put on the price. (Middle East and North African instability).
U.S. oil prices also are much lower compared to other parts of the world. U.S. economic activity should relatively slow down due to increasing oil prices.
Just recently I saw on the news that Coca-Cola had to raise its product prices as they need to compensate for higher fuel/energy costs. It will be interesting to see what other companies have to do the same thing.
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