Economists expect slower growth ahead
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PrintWith the first quarter 2010 gross domestic product (GDP) growth estimate revised down by 0.3% from last month's estimate and other indicators showing a lack of traction for a full out recovery, many economists feel 2010 will be a slow growth year.
All indicators are that the unemployment rate currently at 9.7% will stay well above 9% for the rest of the year.
The Commerce Department's third estimate of the first quarter 2010 GDP was revised down to 2.7% from the previous estimate of 3%. This was mainly due to consumer spending coming in lower than expected and imports growing more than previously expected.
This quarter follows a very strong fourth quarter 2009, when the economy grew by 5.6%.
However, many economists believe that for a full blown recovery that would change the employment situation substantially, the economy needs to grow at 5% for a full year.
Businesses and governments are likely to reduce spending in the second half of 2010, while consumers, who drive most economic growth, aren't expected to take up the slack.
High unemployment and tight credit have kept consumers from ramping up their spending as in past recoveries. The housing industry has played a big role after previous recessions. But this time it is slumping and subtracting from economic growth.
