By Christian E. Weller
The economic stimulus package passed by Congress earlier this year helped the U.S. economy grow by 1.9 percent in the second quarter of this year, according to government figures released today. Still, substantial weaknesses in the economy remain, which may require another economic stimulus package in the coming months.
The Commerce Department’s Bureau of Economic Analysis estimates that annualized economic growth in the second quarter of 2008 of 1.9 percent was up from 0.9 percent in the first quarter. The acceleration was the result of faster consumption growth, stronger business investment expansion, and better trade performance than in previous quarters. Much of the acceleration, though, is the consequence of tax rebate checks that were mailed out in the second quarter and which could continue to lift spending in the subsequent quarters.
Today’s figures show that the economic stimulus worked as intended. People are spending some of the additional income that they received from the tax rebate checks, though they clearly remain worried about the combination of higher prices and fewer jobs in a slow economy, and therefore are cutting back on spending that is directly related to higher oil prices, such as cars and travel. This may mean that they will spend the stimulus checks more slowly than expected and that the economy may need additional support for growth to get back on a stronger track.
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