Economic growth in the United States has encountered a significant setback, according to a new report from the Commerce Department.
In its initial estimate of the first three months of 2011, the government agency revealed that gross domestic product rose by a seasonally adjusted annual rate of 1.6 percent from January to March. This figure is significantly lower than the 3.1 percent pace of growth in the fourth quarter of 2010, and the slowest pace since last spring.
Rising prices on gasoline and food are believed to be the primary factors behind reduced consumer spending, according to media reports. In certain areas of the U.S., gas costs have exceeded $4 per gallon.
Furthermore, the most recent unemployment figures represent a lull in economic growth. On April 28, the Labor Department stated that the initial jobless claims increased by 25,000 in the week ended April 23. According to The Wall Street Journal, Dow Jones economists predicted that the jobless claims would fall by 8,000 during that same period.
During a press conference on April 27, Federal Reserve Chairman Ben Bernanke predicted that the unemployment rate would steadily improve throughout 2011, but the need to contain inflation would make rapid job growth nearly impossible.
“It’s not clear that we can get substantial improvements in payrolls without some additional inflation risk,” said Bernanke, quoted by Bloomberg.