- Richard Gatto
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Economy Grows 3.3 Percent During 2Q
Contrary to the recent grim news about home foreclosures, bank failures, the credit crunch, rising unemployment rates, soaring oil prices, inflation and stock-market jitters, the United States’ economy — surprisingly — grew by 3.3 percent during the second quarter of 2008.
The economy grew at its fastest pace in nearly a year, thanks primarily to foreign buyers purchasing inexpensive U.S. exports, as well as the tax rebates that sent Americans on a shopping spree.
According to Commerce Department statistics, the GDP increased at a 3.3 annual rate from April through June. This revised statistic represents a significant improvement over the initial 1.9 percent estimate, and exceeded economists’ expectations of a 2.7 percent growth rate.
The rebound was welcome news after two grim quarters. The economy contracted during the last three months of 2007, and registered a feeble 0.9 percent growth rate during the 1st quarter of 2008. Spring’s 3.3 percent performance was the best result since the third quarter of 2007, when the economy grew by an impressive 4.8 percent.
Still, the good news is something of a fluke. The economy is still quite fragile, according to Federal Reserve Chairman Ben Bernanke, who recently warned that the weakness will remain throughout 2008. Analysts expect the economy to hit another pothole during the 4th quarter, once the glow of the tax rebates dims. Additionally, exports could decline if other nations experience similarly slowing economies.
Add presidential politics into the mix. Democratic nominee Barack Obama favors a second government-stimulus package, while Republican John McCain supports free trade and other business measures to energize the economy. With less than two months remaining until the election, the candidates are certain to have a lot more to say on how they plan to energize the economy.