Economy

The economy grew more slowly in the first quarter, behind consumer spending levels that weren't as strong as initially reported, while imports increased. 

Gross domestic product, a measure of the nation's economic health, rose by 2.7 percent in the first three months of the year, slightly less than the 3 percent reported last month, the Commerce Department said Friday. 

That figure is much lower than the 5.6 percent pace in the fourth quarter of 2009. 

The good news is the economy has expanded for three straight quarters after a severe recession that saw the economy shrink for four quarters in a row, the worst stretch since World War II. 

Economists estimate that 3 percent growth is needed and at least 5 percent is optimal to create the jobs needed to lower the unemployment rate. Growth has averaged 3.5 percent over the past three quarters. 

Still, there is trepidation for future growth potential because of the European debt crisis that is likely to affect world trade and concerns about a contraction of business spending once companies build back their inventories. 

Mortgage rates dropped to a record low 4.69 percent in the week ending Thursday, which could provide a boost to the sluggish housing market. 

Following the April 30 expiration of a tax incentive to purchase a home, mortgage rates declined for 30-year fixed loans from 4.75 percent, according to a release from mortgage company Freddie Mac. 

The previous record — set during the week of Dec. 3 — was 4.71 percent. 

The tax credit — up to $8,000 for some buyers — appeared to spur more than 2 million additional sales, according to Treasury Department estimates. 

But new homes sales dropped precipitously in May — down 33 percent to an annual pace of 300,000, the lowest level on record and the worst monthly showing since 1963. 

New jobless claims dropped by 19,000 last week, on par with expectations and the largest amount in two months but still not reflecting an improving job market. 

Claims decreased to a seasonally adjusted 457,000 for the week ending June 19, a drop from the previous week's revised figure of 476,000, according to Labor Department figures released Thursday. 

The 4-week moving average, which smooths out the volatility of the weekly number, dropped 1,500 to 462,750, from the previous week's revised average of 464,250.

The advance number for seasonally adjusted insured unemployment during the week ending June 12 was 4.55 million, a decrease of 45,000 from the preceding week's revised level of 4.59 million. 

Federal Reserve officials on Wednesday kept short-term interest rates near zero, saying they continue to expect that economic conditions will "warrant exceptionally low levels of the federal funds rate for an extended period."

The Federal Open Market Committee, the policy-making arm of the central bank, said "financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad." 

The Fed didn't specifically mention Europe but it's clear the debt problems of several nations, especially Greece, and the need for a $1 trillion bailout there have caused concerns in worldwide stock markets. 

Although the economy has been growing for nearly a year, there are renewed concerns of a "double-dip" recession because of high levels of unemployment and a sluggish housing market. 

The Federal Reserve chairman has said he thinks the nation is climbing out of the recession and won't lose ground. 

The CEO economic survey released by the Business Roundtable on Wednesday showed that corporate leaders are bullish on the economy but remain cautious about making capital purchases. 

"Our member CEOs plan to continue hiring and expect improved sales," said Ivan Seidenberg, the Roundtable's chair, who is also the chairman and CEO of Verizon Communications. "That said, our CEOs are demonstrating some caution in the area of capital expenditures, with fewer planning to increase spending and more keeping it level."

The survey captured CEOs' sentiments in the second quarter of 2010 and compared them with attitudes from the first quarter of the year. 

The Congressional Black Caucus attacked Republican senators on Wednesday for sitting on jobs legislation.

Sales of new homes plummeted 33 percent in May to the lowest level on record following the expiration of a federal government tax credit. 

Sales dropped to an annual pace of 300,000 last month from April, the slowest pace since 1963 and largest monthly drop on record, startling analysts who predicted that demand would decline but nowhere near as much as it did, the Commerce Department reported Wednesday. 

Sales have decreased 78 percent from their peak in July 2005. 

Economists had expressed concern that the housing market could go into a deep slump after the government tax credit — that provided up to $8,000 — expired April 30. 

Sales dropped across the country in May, with the West leading the pack, recording a 53 percent decrease. Sales fell 33 percent in the Northeast, 25 percent in the South and 24 percent in the Midwest. 

House Republican Conference Vice Chairwoman Cathy McMorris Rodgers (Wash.) and fellow conservatives have sent a letter to Treasury Secretary Tim Geithner expressing strong opposition to the administration urging the G-20 to continue economic spending policies instead of focusing on deficit reduction.

"We write in anticipation of the G-20 meeting to be held this coming weekend in Toronto, Canada and to express our concern with the reported policies advocated by the United States to address the global financial crisis," the letter states. "In particular, we are disturbed to know that despite Europe's growing debt crisis the United States continues to push policies in the international community that promote unsustainable global government borrowing and spending."

Deficit reduction must take a backseat to policies driving economic growth, according to President Barack Obama’s economic team.

Sales of existing homes fell unexpectedly by 2.2 percent from April to May as analysts' estimates came up short that a federal tax incentive would boost sales beyond its expiration date. 

Demand decreased to a 5.66 million annual rate, as home sales most likely rallied before the April 30 deadline on a tax incentive worth as much as $8,000, according to data released Tuesday by the National Association of Realtors.

Despite the drop, NAR chief economist Lawrence Yun was upbeat on the news, saying, "We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings." 

Economists had estimated a more-than-6-percent increase and a pace greater than a 6 million annual rate. April's sales rate was revised up to 5.79 million from the 5.77 million reported last month.