‘Soft footing’

Economy grows, but details not encouraging

THE OUTLOOK for the economy is only getting cloudier.

The Commerce Department on Thursday stood by its earlier estimate that the economy ran at a 1.9% pace in January through March.

But the details were less encouraging: Consumers were tighter with their cash early this year than previously thought and exports were slower.

Jobless claims last week clung near the highs of the year, offering a sign that the labor market is, at best, staggering forward and underscoring the idea that the economy is sputtering.

“These confirm the fact that the recovery is still on soft footing,” 4CAST economist Sean Incremona told the Daily News.

“Right now, things just aren’t looking very good at all.”

Consumer spending is a key to the economy’s pace, powering about 70% of growth. In the first quarter, it rose just 2.5%, down from a prior estimate of 2.7%, the government said.

More recent reports also show shoppers are holding back. Retail sales dropped in April and May. That could get even worse if job growth stumbles.

Exports grew only 4.2% in the first quarter instead of the projected 7.2%, and business inventories rose $54.4 billion, rather than a previously estimated $57.7 billion.

The government also toned down its assessment of corporate earnings strength, which declined for the first time since the final quarter of 2008. After-tax profits shrank 5.1% instead of the expected 4.1%.

One bright spot was that businesses invested more than estimated earlier.

A separate report from the Labor Department showed first-time claims for unemployment benefits slipped 6,000 to a seasonally adjusted 386,000.

Economists estimate the U.S. grew 2% in the second quarter, but uncertainty over the fiscal situation and Europe’s debt problems threaten to crimp even that.

With News Wire Services