U.S. economy grew by 1.9% in the first quarter, announced Thursday the Department of Commerce, revising the previous estimate of 2.2%, due to the slower advance of inventory and wider cost reductions in the public sector, according to Bloomberg.
Consumer spending at retailers and car dealers have supported the advance in the first three months of the year, while business investment slowed down. The threat of worsening economic environment in Europe increases fears that the U.S. economy will have problems to generate faster growth.
“The growth depends on consumers and their capacity to support the recovery. In the first quarter they contributed quite well. I fear that the situation will not continue because it was based on better figures on the labor market, whose effect is already lost”, said Aneta Markowski, senior economist at the New York division of Societe Generale. The world’s largest economy grew by 3% in the last quarter of 2011.
Two separate reports on the labor market showed on Thursday larger than expected unemployment claims for last week and a lower than anticipated increase in the number of employees in the private sector for the month of May.
Number of applications for unemployment benefits rose 10,000 to 383,000 in the week ending May 26, above expectations of 377,000. However, the number of employees in the private sector rose by 133,000 in May, according to ADP Employer Services, while analysts anticipated 150,000.