Economist Joshua Shapiro doesn’t expect things to get any better. “I don’t see any significant drivers for the economy in the second half,” Shapiro says.
The U.S. economy probably expanded in the second quarter at the slowest pace in a year as a softening labor market caused Americans to cut back on spending, economists said before a report today.
Gross domestic product, the value of all goods and services produced, rose at a 1.4 percent annual rate after a 1.9 percent gain in the prior quarter, according to the median forecast of 81 economists surveyed by Bloomberg News. Consumer purchases, which account for about 70 percent of the world’s largest economy, may have grown at the weakest pace in a year.
Households are restraining spending just as Europe’s debt crisis and looming U.S. tax-policy changes curb corporate investment, hurting sales at companies from United Parcel Service Inc. (UPS) to Procter & Gamble Co. (PG) Cooling growth makes it harder to reduce unemployment, helping explain why Federal Reserve Chairman Ben S. Bernanke told Congress last week that policy makers stand ready with more stimulus if needed.
“We have an economy that is still very weak,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York and the best forecaster of U.S. economic data in the two years through May, according to data compiled by Bloomberg. “Job growth is not enough to make a big dent in the unemployment rate. Households are trying to repair their finances. I don’t see any significant drivers for the economy in the second half.”