Is it now the shit is hitting the fan? 7 years of borrowing and living on military build up, on lies and false reports, is finally coming to an end?
Firms have been cutting down on their supplies
The US economy grew at a pace of 0.6% in the first three months of 2007, its weakest rate in more than four years, official figures have shown. Hit by Americans importing more goods and firms cutting their supply stockpiles, the figure was a downward revision on the initial 1.3% estimate.
The latest figure from the Commerce Department was also worse than market expectations of 0.8%.
It was the slowest rate of growth since the final three months of 2002.
Another significant factor for the weak showing was the downturn in the housing market, which posted a 15.4% reduction in new home building during the quarter.
Weakness in the housing market is also hitting the US economy
However, consumer spending remained resilient, adding 4.4%.
And business investment was better than earlier estimates, growing 2.9%, revised up from 2%.
“It looked like the market was starting to lean into the wind, anticipating a weak number, and we got a little sell-off when it did come in,” said Michael Woolfolk, senior currency strategist at Bank of New York.
“But it’s quite obvious the economy bottomed in the first quarter and this leaves us with a better base from which to bounce back.”
Other analysts are also confident that the figures for April to June will be much better.
“I think we’ll see second-quarter growth above 3% and 2.5% for all of 2007,” said Lehman Brothers senior economist Drew Matus.
Earlier this week, minutes from the last Federal Reserve meeting showed that the central bank continued to see inflation as the “predominant concern” for the US economy.
The Fed left interest rates unchanged at 5.25% at its last meeting on 9 May.
In its minutes, the Fed added that the housing market downturn had been more severe than expected, but that the risk of the US economy slowing abruptly had lessened.
Separate figures on Thursday showed that US construction spending rose by an unexpected 0.1% in April, led by public and commercial building work. Economists had predicted no change.