Economic growth accelerated in the second quarter, when tax refunds gave a ball oxygen to consumers and exports have improved the balance sheet of enterprises. But withdrawals led to a period of contraction in late 2007.
The Commerce Department said on Thursday that the gross domestic product grew at an annual rate of 1.9% in the quarter from April to June. It was an improvement over the weak growth of 0.9% achieved in the first quarter of the year and a real contraction in the last 2007.
In addition, the Labour Department also reported on Thursday that layoffs increased markedly last week. New claims for unemployment insurance rose to 448,000, the highest level in five years.
The weak job market has kept wage pressures at bay. Meanwhile, wages and benefits to unemployed American workers increased by 0.7% in the second quarter, the same growth the previous quarter. It was the best in two years, the department said in another report.
The rebound in the second quarter was not as robust as had been expected by economists, who had predicted an expansion of 2.4%. That surge surely will not be considered a sign of economic recovery. There are fears that as they shut down the impact of tax refunds, the economy might have marked another setback later this year.
The Wall Street investors were not pleased with these reports and the stock market started the day with widespread casualties.
The health of the U.S. economy is the greatest public concern and therefore of politicians including those candidates who aspire to the White House.
The GDP contracted at an annual rate of 0.2% in the last three months of 2007, according to annual revisions disseminated by the government.
The contraction reflects the largest contraction in 26 years in the business of building and the prudence of consumers frightened by all these symptoms.
The contraction in the fourth quarter was the worst from occurring in the third quarter of 2001, the last time the economy fell into a recession. The government estimates that the economic performance of the last quarter of last year was positive-though minimum-digit growth of just 0.6%.
The GDP measures the value of all goods and services produced in the United States and is the best barometer of the country's economic health.
