The US has revised its estimate for the second quarter down, with an annualized growth rate of 1% from April to March, instead of the previously published 1.3%. This is according to the Commerce Department’s estimates for economic growth.
The downgrade will up the pressure both the US government and the US Federal Reserve to help increase the economy. More will have to be done in order to try and stimulate growth. Pensioners in the UK will be affected if their pensions are invested in stock, such as those on stakeholder pension.
Mr. Ben Bernanke, chief executive of the US Treasury Federal Reserve, had been expected to announce new quantitative easing measures, or QE3, at the Jackson Hole, Wyoming summit of global central banks. However, he revealed no such plans, announcing no stimulus package. He did suggest, however, that the September meeting would be increased to two days instead of one.
In the second quarter, on a non-annualized basis the economy in the US only grew 0.2% instead of the estimated 0.3%. Consumer spending is still low, as unemployment and utility bills in the US remain high, much like rates in the UK.
This means the countries reflect each other in terms of economic growth, as well as other factors. If you would like to discover how you can maximize your pension while cost of living is still high, consider using our pension calculator.
The Consumer Spending Issue
The Commerce Department said that exports were only at a 3.1% rise, down from the estimate of 6%. Consumer spending, on the other hand, increased, at 0.4% instead of 0.1%, with business spending up at 9.9% from 6.3%. This shows that consumer spending is still extremely weak however. Consumer spending is nearly two-thirds the UK economy.
This downgrade was not entirely unexpected either. Paul Ballew, chief economist at Nationwide Insurance out of Columbus, Ohio, who expects rates to be a bit stronger in the last part of the year, said, “We were expecting a bit of a downward revision, which reflects the headwinds on the recovery and all the factors we’re trying to wrestle to the ground.”
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