Japan quake hits US growth

It also pinned a quickening of inflation largely on temporary factors, including higher commodity prices and supply chain disruptions from Japan's earthquake.
The central bank said the forces pushing up prices should dissipate, allowing inflation to subside to levels consistent with price stability, even as growth revives.
"The slower pace of recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply-chain disruptions associated with the tragic events in Japan," the Fed said in a statement at the conclusion of a two-day meeting.
As widely expected, the Fed said it will maintain interest rates at exceptionally low levels for an extended period. It also confirmed it was ending its $600-billion bond-buying programme at the end of the month, while reiterating that it will continue to reinvest principal payments from its holdings.
The Fed downgraded its view of the labour market, saying it had been "weaker than anticipated". That contrasted with the statement after its last meeting in April when it said the job market was "improving gradually".
US stocks dipped after the Fed's statement was released, while prices for US government bonds slipped and the dollar edged higher against the euro.
"The Fed statement did not offer any real surprises, but it did confirm the job situation is much weaker than was expected," said Daniel Penrod, senior industry analyst at the California Credit Union League in Ontario, California.
"The likelihood is that, because of the weakness in the jobs sector, rates are going to stay low."
Two years after the end of the US recession and unprecedented attempts by the Fed to boost growth, the recovery looks disappointingly weak.
While Fed officials have persistently said they expect growth to accelerate, reports since the Fed's April meeting point to a clear loss of momentum in the world's largest economy.
Employers have been reluctant to hire and the jobless rate remains stubbornly high, climbing to 9.1% in May.
Housing - a central component of most US families' wealth - remains mired in a deep slump.
With jobs uncertain and home values falling, consumer spending, which makes up around 70% of US GDP, has lagged. Retail sales declined in May for the first time in 11 months. Factory activity has been sluggish as well.
The economy grew at just a 1.8% annualised rate in the first three months of the year. Analysts expect growth in the second quarter to log a rate of about 2%, still not sufficient to generate a big increase in hiring.

Source of  www.timeslive.co.za