Business World

Wednesday 13 December 2017

Increase in petrol prices tipped to hit US growth

Timothy R Homan

THE US economy probably grew at a slower pace in the first quarter as a jump in petrol prices caused consumers to cut back, economists have predicted in a report due this week.

Gross domestic product (GDP) rose at a 1.9pc annual pace after increasing at a 3.1pc rate in the previous three months, according to the median estimate of 66 economists, surveyed before an April 28 Commerce Department report.

Other data may show business investment remained a pillar of the economic rebound, while house prices fell.

Federal Reserve policy makers, when they meet this week, will likely say they'll complete the second round of stimulus worth $600bn (€412bn) to help sustain the recovery.

While companies like General Electric and Apple are benefiting from gains in spending on equipment and software, households are feeling the pinch of higher food and fuel prices.

"If we continue to get these sharp jumps at the pump, that will be a major hit to consumer sentiment," said Ryan Sweet, a senior economist at Moody's Analytics in Pennsylvania.

Prices for all goods and services rose 2.4pc last quarter.

Irish Independent

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