Craighead on Slowing U.S. Economy

Assistant Professor of Economics Bill Craighead weighs in for McClatchy Newspapers on a new report showing U.S. economic growth slowed to a disappointing 2.2 percent annual rate in the first quarter of 2012. He points out that while consumer spending grew at a healthy 2.9 percent, despite relatively flat income growth, business investment remained weak.

“I think what it says is consumers are coming back a bit, but firms are still holding back. They don’t feel confident enough in the recovery to start adding to capacity” and expanding, he says. Consumers appear to be making up for cautious spending in recent years, more confident that the worst is over, he suggests in the article.

“Given corporate profits, you might have hoped for more investment growth,” Craighead says. The economy continues to “hit the snooze button. … It’s acceptable growth in the normal economy, but given how many people are unemployed it is disappointing.”