US economy gets chill after winter warm-up - Boston News, Weather, Sports | FOX 25 | MyFoxBoston

US economy gets chill after winter warm-up

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WASHINGTON (NewsCore) - After springing forward, is the US economy set to fall back?

Most experts don't think so, but several weeks of disappointing economic data have raised fresh doubts about the strength of the recovery. The number of people applying for jobless benefits rose, home sales weakened and the sizzling manufacturing sector cooled off a bit.

Yet other parts of the economy continue to improve, helped by American consumers. Auto sales are way up, for instance, as growing confidence among consumers induces them to spend more on goods whose purchases they've long put off.

Higher spending is the biggest reason economists polled by MarketWatch expect first-quarter growth to tally 2.6 percent when the government issues its preliminary report on Friday. Consumers' purchases of goods and services account for up to 70 percent of US growth.

The report on gross domestic product is the highlight of a busy week of data that also includes a pair of reports on consumer confidence as well as orders for long-lasting goods such as cars, computers and appliances.

If GDP meets expectations, the last quarter of 2011 and the first quarter of 2012 would mark the best period of back-to-back growth in two years.

"The US economy should continue a slow recovery," said analyst Steven Leslie at the Economist Intelligence Unit. "We continue to have a positive outlook, though certainly not an effervescent one."

Yet GDP is generally a backward-looking report, and the immediate future doesn't look quite as bright based on the most recent batch of data.

The most worrisome reports -- slower hiring in March and rising applications for jobless benefits -- suggest that employment growth has leveled off.

The number of new jobs created in March sank to 120,000 from 240,000 in February and 275,000 in January. Jobless claims, meanwhile, have climbed to a four-month high.

In the view of most economists, unusually warm weather likely explains the sharp swing in job creation. Companies retained or added positions during a mild winter that normally would have been filled in the spring.

The upshot: employment is growing at a modest pace, not a rapidly accelerating one.

 "If there was some pull forward in hiring, there will be some payback," chief economist Steven Ricchiuto of Mizuho Securities said. "No one is going to be looking to expand at an aggressive pace. Companies are going to be cautious and guarded."

Economists also blame the government's process for adjusting economic data to seasonal variations. They say the adjustments probably exaggerated the strength of the economy in the first few months of the year.

"We're in a below-trend growth trajectory," said Ricchiuto, who's consistently been one of the most cautious voices on Wall Street. "There are still a lot of headwinds."

Among those headwinds is an economic downturn in Europe. US manufacturers are still growing, but the latest data suggest that overseas weakness is acting as a slight drag.

Read more: http://www.marketwatch.com/story/us-economy-gets-chill-after-winter-warm-up-2012-04-22?

 

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