Weak GDP Growth Matches Initial Estimate
RENEE MONTAGNE, host:
In NPR's business news, the economic slowdown seeps into the job market.
The Labor Department says new applications for unemployment benefits last week rose by about 20,000, more than economists were expecting. Meanwhile, the Commerce Department says the economy grew last quarter at a meager rate of six-tenths of a percent. NPR's Chris Arnold has more.
CHRIS ARNOLD: This revised GDP number confirms that the country is on the brink of recession.
Mr. NIGEL GAULT (Economist, Global Insight): The economy, really, just keeping its head above water.
ARNOLD: Nigel Gault is an economist with the forecasting firm Global Insight. He says the only thing keeping the economy growing right now is foreign trade. He says domestic spending is slowing, and that's concerning.
Mr. GAULT: The worry is that as we go into the first half of the year, we're going to see even weaker numbers on the domestic spending side. We know that housing is still falling very sharply. There are signs that the consumer is pulling back. Is the strength from the foreign side going to continue to be sufficient to keep us in positive territory for growth?
ARNOLD: Unemployment numbers out today were disappointing because some economists were holding out hope that those numbers would improve. But they did not.
Mr. GAULT: The numbers have (unintelligible) week to week, but the trend at the moment is clearly upwards. We're moving into a zone that's normally associated with recession.
ARNOLD: Economists say best case scenario is that the economy slows, but later in the year, the fiscal stimulus kicks in gets things back on track. Worst case, the housing and credit troubles drag the economy into a prolonged downturn, with rising unemployment that hurts a lot of people.
Chris Arnold, NPR News.
MONTAGNE: The housing slump is prompting calls for a government plan to help struggling homeowners, but the White House seems to be backing away from some of those efforts. Today in the Wall Street Journal, Treasury Secretary Henry Paulson dismisses many of the aid proposals as bail outs for reckless lenders, investors and speculators. The administration is pushing a plan that doesn't use taxpayer dollars, but rather encourages the mortgage industry to ease up on certain borrowers.
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