The U.S. economy grew at an annual rate of only 2.2 percent in the first quarter of 2012, according to the Commerce Department. This represents a decline from the 3.0 growth experienced in the final quarter of 2011.
On the plus side, consumer spending increased to 2.9 percent in the first quarter. Because consumer spending tends to drive the economy, analysts expect this improvement to result in job growth which, in turn, may produce a growth rate of 3.0 percent for 2012.
However, such job growth does not appear to be occurring now. In April, the number of first-time jobless claims reached a three months high. The four-week average for such claims is slightly more than 380,000, the most since January.
According to the Washington Post (print edition), analysts had not expected this turn of events. In light of the data, “hopes for heady improvement in the labor market continue to shrink.”
The Federal Reserve has projected that the unemployment rate will decline from its current level, 8.2 percent, to as low as 7.8 by the end of the year. The latest data on jobless claims suggest that even this quite modest expectation may be too optimistic.