Evidence mounts on slower U.S. economic growth

[Leroy N. Soetoro]

http://www.reuters.com/article/2013/05/16/us-usa-economy-prices-
idUSBRE94F0J520130516

(Reuters) - The U.S. economy showed fresh signs of slower growth in the
second quarter, with factory activity slipping in the mid-Atlantic region
while groundbreaking declined at home construction sites.

Other data on Thursday showed a spike in new claims for jobless benefits
last week as well as soft underlying inflation that could point to weak
demand in the economy.

"We are seeing a soft start for growth in the second quarter," said Sam
Bullard, an economist at Wells Fargo in Charlotte, North Carolina.

The data could raise concerns over the impact of a government austerity
drive that began in January and the fallout from a recession in the euro
zone.

It could also increase pressure on the Federal Reserve to keep its money
printing press running on overdrive to support the economy.

The Philadelphia Federal Reserve Bank said its gauge of factory activity
in the mid-Atlantic region fell to minus 5.2 in May. Negative readings in
the index point to a contraction in activity.

Drops in new orders and in employment weighed on the index, which covers
factories in eastern Pennsylvania, southern New Jersey and Delaware.

The report added to recent signs that weakness in manufacturing in March
and April extended into May.

"We are not rebounding from the recent swoon," said Jacob Oubina, an
economist at RBC Capital Markets in New York. "We are just muddling
along."

U.S. economic growth picked up in the first three months of the year after
a dismal fourth quarter, but the April-June period is expected to show a
more lackluster expansion as Washington's push to trim the budget deficit
weighs on consumers and businesses.

The federal government hiked taxes in January and initiated sweeping
budget cuts in March. Signs of consumer weakness were evident in a report
by Wal-Mart that sales fell 1.4 percent in the first quarter at its U.S.
stores open at least a year.

The data put downward pressure on U.S. stock prices, which were little
changed at midday. It also pushed down yields on U.S. government debt,
while the dollar weakened against a basket of currencies.

SLOW STARTS

Groundbreaking for new U.S. homes fell more than expected in April,
plunging 16.5 percent to a 853,000-unit annual rate, the Commerce
Department said in a separate report.

Still, permits to build new homes rose, lending support to the expectation
of analysts that housing will contribute to the economy's recovery this
year. In addition, most of the weakness in starts was in the volatile
multifamily homes segment.

Separately, a report from the Labor Department showed a sharp drop in
gasoline costs in April led to the biggest drop in U.S. consumer prices in
more than four years.

The Consumer Price Index slipped 0.4 percent, the biggest decline since
December 2008 when America was suffering some of the darkest days of its
financial crisis. Analysts had expected a more modest 0.2 percent drop.

In the 12 months through April, consumer prices rose 1.1 percent. That is
well below the Fed's 2 percent inflation goal. The U.S. central bank
targets a different gauge of prices that tends to run cooler than the
Labor Department's index.

Gasoline costs plummeted by 8.1 percent, the biggest fall since December
2008.

However, the weakness in the price index extended to a measure of
underlying inflation that strips out volatile energy and food prices. That
gauge rose just 0.1 percent, and was up only 1.7 percent from a year
earlier - its smallest 12-month advance since June 2011.

"Further falls in U.S. core inflation in the coming months may make some
Fed officials concerned about very low inflation, or even deflation," said
Paul Dales, an economist with Capital Economics in London. Deflation
entails spiraling declines in prices and wages and is difficult for
policymakers to combat.

Inflation has held low in large part because of weakness in the labor
market, which has kept a lid on wages and spending.

Last week, the number of Americans filing new claims for unemployment
benefits climbed at the fastest pace in six months, although analysts said
one week's data was not enough to derail the labor market's slow but
steady recovery.

"If you get another week or two over 350,000, then you might be more
concerned," said Craig Dismuke, chief economic strategist at Vining Sparks
in Memphis, Tennessee.


--
Barack Obama, reelected by the dumbest voters in the history of the United
States of America.

Eric Holder, racist black murdering United States Attorney General, still
has his job.

Nancy Pelosi, Democrat criminal, accessory before and after the fact to
improper vetting of Barry Soetoro aka Barack Hussein Obama, a confirmed
felon using SSAN 042-68-4425, belonging to a dead man.

Obama ignored the brutal killing of an American diplomat in Benghazi, then
relieved American military officers who attempted to prevent said murder
in order to cover up his own ineptness.

Obama continues his goal of disarming America while ObamaCare increases
insurance premiums 200% and leaves millions without health care.

Obama helped bankrupt Illinois. Democrat run Chicago closes 54 public
schools.

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