The US economy rebounded vigorously in the second quarter, growing at a pace of 4 percent that erased the impact of the sharp contraction seen in the winter, the US Department of Commerce reported on Wednesday.
However, the US Federal Reserve remained cautious, sticking to its dovish stance after a two-day monetary policy meeting, still seeing some latent weakness that requires keeping interest rates low for the foreseeable future.
The initial estimate of second-quarter growth was far better than expected and showed a solid recovery in private investment and consumer spending, especially on durable goods such as cars and appliances.
In addition, government spending, which dragged on GDP for the past six quarters, added to the expansion.
That suggested that the severe weather and a modest slump in confidence between December and March were behind the winter slowdown, as economists had said.
However, the fresh data, which included upward revisions for the past year, also showed the economy generally has more momentum than earlier thought.
The department said the January to March contraction was only 2.1 percent, compared with the 2.9 percent previously reported, and it upped its estimate of growth last year to 2.2 percent from 1.9 percent, due to a much stronger second half.
“This is not just a case of better weather. There is evidence to indicate that there has also been an underlying improvement in the economy, and that robust growth will be sustained into the third quarter,” Markit chief economist Chris Williamson, said.
The fresh data support calls for the US Federal Reserve to move more quickly to address allegedly overheated asset markets, the growth in risky investment, and a pickup in inflation.
So-called “hawks” worried about inflation say the central bank’s Federal Open Market Committee needs to accelerate its plans to raise the benchmark federal funds rate up from near-zero only in the second half of next year.
One committee member dissented from Wednesday’s policy decision, saying its open-ended commitment to the ultra-low rate “does not reflect the considerable economic progress that has been made,” including the sharp fall in joblessness and the pickup in prices.
The committee as expected said the economy was strong enough to further reduce its monthly bond purchases by US$10 billion to US$25 billion a month. The program, which was at US$85 billion in December, is slated to wind up in October.
On the US Federal Reserve funds rate the committee took the view that the ultra-low rate remains necessary to support growth.
The statement reflected continued disappointment with the state of the jobs market, saying that various data “suggests that there remains significant underutilization of labor resources.”
Still, in a significant shift, the committee dropped its previous expression of concern about low inflation.
“The committee sees the risks to the outlook for economic activity and the labor market as nearly balanced and judges that the likelihood of inflation running persistently below two percent has diminished somewhat,” it said.
However, Edelstein pointed to a key issue that was unresolved by the GDP data: whether household earnings are gaining, which would feed into higher consumer spending.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained