Wall Street Journal (09/28/12) Josh Mitchell; Ben Casselman
U.S. government reports on durable goods and the revised gross domestic product indicate that the economy remains uncertain, with manufacturers mired in a slump and overall growth tepid. GDP for the second quarter was revised downward, while orders for durable goods suffered the biggest monthly drop in more than three years. The new reports come despite other signs the economy is improving slowly. The job market is slowly growing, consumers are becoming more confident, and the housing market is finally showing signs of a rebound. Adding jobs is key because with weakness in exports and business spending, economic growth in the remainder of the year will hinge largely on how much consumers are willing to spend.
More hiring, combined with rising home prices and consumer confidence, could lead to more spending. But so far, such progress has not been strong enough to offset the external forces holding back growth. Businesses may also be holding back amid the uncertainties of the coming presidential election and the looming “fiscal cliff,” a huge package of tax increases and government spending cuts set to take effect Jan. 1.