Page 7 - Aruba Today

U.S. NEWS A7
Saturday 30 January 2016

US Financial Front:

American economy expected to strengthen after weak 4Q

Jeff Cuvelier, Jorgensen Forge master machinist, left, talks with Gov. Jay Inslee, center, on a tour at IHS Global Insight. “This warmer-than-normal De-
of the plant in Seattle. On Friday, Jan. 29, 2016, the Commerce Department issued the first of three is not an early warning of cember, which reduced
estimates of how the U.S. economy performed in the October-December quarter. something worse.” spending on winter cloth-
Behravesh said two of ing and utility bills.
(AP Photo/Elaine Thompson) the key negative factors Friday’s estimate of fourth-
last quarter — an effort quarter growth was the first
MARTIN CRUTSINGER on the strength of healthy 0.6 percent annual growth by companies to pare an of three that the govern-
AP Economics Writer job gains. rate in last year’s first quar- overhang of unsold goods ment will issue. Besides con-
WASHINGTON (AP) — The The economy grew at an ter. and investment cutbacks sumer spending, exports
U.S. economy struggled annual rate of just 0.7 per- Though the slowdown by oil companies facing were a source of weakness
to grow in the October- cent last quarter, less than late last year could renew much lower energy pric- last quarter. That reflected
December quarter as half the 2 percent growth doubts about the durabil- es — would likely diminish in part a stronger dollar,
consumer spending, busi- rate in the July-September ity of the 6½-year-old eco- early this year. That would which has made U.S. goods
ness investment and ex- period, the government nomic expansion, most an- pave the way for decent pricier and therefore less
ports slowed. Yet despite said Friday. It was the worst alysts said they expected annual growth of around competitive overseas. Per-
global weakness and showing since a severe win- the slump to be short-lived. 2.5 percent in the first half sistent sluggishness in such
shrunken oil and stock pric- ter slowed the economy, “The weak growth is tem- of 2016, Behravesh said. key export markets as Chi-
es, many economists ex- as measured by the gross porary,” said Nariman Beh- Paul Ashworth, chief econ- na and Europe hurt, too. A
pect growth to accelerate domestic product, to a ravesh, chief economist omist at Capital Economics, wider U.S. trade deficit cut
said he thinks GDP growth annual growth last quarter
will rebound to an annual by 0.5 percentage point.
rate between 2.5 percent An additional drag came
and 3 percent in the first six from cutbacks in busi-
months of 2016 as further ness investment spending,
solid job growth fuels ad- which fell at a 1.8 percent
ditional consumer spend- annual rate, with spending
ing. Consumer spending on structures down 5.3 per-
accounts for about 70 per- cent. That reflected a 38.7
cent of economic activity. percent plunge in spending
Much of last quarter’s in the oil and gas industry,
weakness reflected a slow- which has slashed drilling
down in consumer spend- and exploration in response
ing, which grew at a 2.2 to the plunge in oil prices.
percent annual rate, com- Besides pulling back on in-
pared with a 3 percent vestment, businesses cut
rate the previous quarter. spending on stockpiles to
Analysts said part of that try to pare unwanted in-
weakness likely reflected a ventories. q

US paychecks show little sign of accelerating in 4th quarter

CHRIS RUGABER and benefits have risen just 2009 that increases have For example, the number of Americans are seeing some
AP Economics Writer 2 percent, the same an- reached that level, but it’s people with part-time jobs improvement in inflation-
WASHINGTON (AP) — U.S. nual pace as the previous not far from the sluggish 2 but who would prefer full- adjusted wages. The Fed’s
paychecks increased mod- two quarters. That is below percent pace that has ex- time work remains higher preferred inflation gauge
erately in the final three the roughly 3.5 percent isted since the recession. than pre-recession levels. rose just 0.3 percent in 2015,
months of last year, yet the rate that is consistent with a Still, the modest annual “In short, largely a continua- held down by sharp drops
gain was little changed healthy economy. gain in the employment tion of recent tame trends,” in gas and other energy
from the sluggish post-re- There have been some cost index suggests that Jim O’Sullivan, chief U.S. prices. That’s lower than
cession trend. The employ- signs wages are picking companies are able to find economist at High Fre- the 1.4 percent gain re-
ment cost index, which up in other data, but those the workers they need with- quency Economics, said in corded in 2014 and means
tracks wages and benefits, gains are modest. Average out offering much higher an email. “Unemployment that U.S. paychecks were
rose 0.6 percent in the Oc- hourly pay increased 2.5 pay. That suggests there still is just approaching stan- able to stretch a bit further
tober-December quarter, percent in December from may be millions of Ameri- dard estimates of the full last year.
the Labor Department said. a year earlier, according to cans who are unemployed employment level now and The modest wage increase
That’s the same as the pre- the government’s monthly or underemployed but are still appears to be trending suggests that inflation will
vious three months. jobs report. That was only not reflected in the official down, and wages tend to likely remain tame in the
In the past year, salaries the second time since unemployment rate. lag.” coming months. q