High consumer spending keeps us economy on track

High consumer spending keeps us economy on track

According to a new calculation, the gross domestic product (gdp) of the world’s largest economy increased by 2.4 percent in the first quarter of 2013 on an annualized basis, the department of commerce in washington announced on thursday.

This means that the first estimate a month ago was corrected downward by 0.1 percentage points. But experts were satisfied with the value.

The picture is clouded above all by significant reductions in government spending. In the important defense sector alone, more than 12 percent was cut over the course of the year in the first quarter – and other public sectors are also seeing forced savings worth billions of euros.

In addition, industry and commerce have been slower to replenish their stocks. Consumer spending, on the other hand, which accounts for 70 percent of U.S. Economic output, rose at its fastest pace since the end of 2010. The annualized increase was 3.4 percent.

Rising share prices and house prices as well as the improved situation on the labor market have, according to economists, significantly improved the mood of consumers. For the second quarter, economists do expect a slight cooling of the economy. But for the year as a whole, they expect growth of about 2.5 percent.


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