Growth likely dipped in winter, but 2012 brightens

Associated Press Modified: April 27, 2012 at 4:30 am •  Published: April 27, 2012
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WASHINGTON (AP) — The U.S. economy probably grew more slowly at the start of the year than at the end of last year. But it's expected to grow faster for all of 2012 than in 2011.

The government on Friday will make its first estimate of growth for the January-March quarter. The consensus forecast is that gross domestic product — the output of all goods and services, from cars to electricity to manicures — grew at a 2.5 percent annual rate, according to a survey of economists by FactSet.

That would be slower than the 3 percent GDP growth in the final three months of 2011. Much of the growth in the October-December quarter was due to businesses aggressively restocking their supplies. The pace of restocking is expected to have declined last quarter.

Trade probably also slowed growth last quarter. U.S. manufacturers are finding it harder to sell products overseas because of Europe's debt crisis and weaker growth in Asia.

On the other hand, the January-March quarter likely benefited from the milder-than-normal winter. It probably led consumers and businesses to step up spending earlier in the year than they typically do. Consumer spending, in particular, is critical because it accounts for about 70 percent of economic activity.

Many economists predict growth will strengthen in the second half of this year because they think hiring will continue to improve. Job growth has helped drive the unemployment rate to 8.2 percent in March from 9.1 percent in August and given households more money to spend.

"I am looking for steady but not spectacular growth this year," said Joel Naroff, chief economist at Naroff Economic Advisors. Naroff thinks the economy will grow 3 percent for all of 2012.

That would be nearly double the anemic 1.7 percent growth in 2011. The economy expanded 3 percent in 2010, the first full year of the recovery after the Great Recession officially ended in June 2009. In 2009, economic output had shrunk 3.5 percent.