News Column

Economy Slows, But Employment Rises

February 5, 2013

Isaac Cohen -- HispanicBusiness

market seesaw

In January, U.S. economic performance revealed contradictory signals. Surprising almost everybody, last week the Department of Commerce, Bureau of Economic Analysis, said U.S. economic growth decreased by 0.1 percent during the last quarter of 2012.

However, job creation in January reached 157,000 and the figures for the last quarter of 2012 were reviewed upward by additional 150,000 new jobs. Still, in January, the unemployment rate increased to 7.9 percent, from 7.8 percent last December.

The slowdown in growth during the last quarter of 2012 was mainly caused by a decrease of 22.2 percent in defense spending and 5.7 percent fall in exports.

Also last week, after its first meeting of the year, the Federal Reserve left unchanged the monetary policy stance of keeping interest rates close to zero and to continue purchasing Treasury and mortgage based securities. However, the central bank recognized that "growth in economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors," while "the unemployment rate remains elevated."

The slowdown in economic growth fueled the debate on fiscal policy which continues in Washington. On March 1, drastic federal government spending cuts will happen, unless Congress and the White House can again come to an agreement to avoid them.

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Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.


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