成人头条

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You鈥檙e listening to the podcast edition of the 成人头条 audio newsline. Learn more about WSU 鈥� the home of Thinkers, Doers, Movers and Shockers 鈥� on the Web at .

Americans are earning and spending more, but that doesn鈥檛 mean the hoped-for economic recovery will be robust this year. 成人头条 economist Jim Clark explains.

Clark: 鈥淓conomic recovery was starting to kick in and show some improvement, but we鈥檝e got a bunch of things now happening in the world that are getting in the way of that recovery.鈥�

Mark Zandi, chief economist at Moody鈥檚 Analytics, has reduced his forecast for 2011 economic growth from 3.9 percent to 3.5 percent. That would still be better than last year鈥檚 2.9 percent growth and the biggest expansion since before the recession. Still, there are a number of reasons why the economic growth may not be as great as was hoped. Clark says at least one reason is the natural disaster in Japan.

Clark: 鈥淭he earthquake and tsunami in Japan have knocked out a whole lot of factories that make lots of little bitty pieces that our economy needs. Carmakers are cutting back on production because they can鈥檛 get things like paint ingredients or little pieces of electronics that go into pollution control equipment.鈥�
Clark also says unrest in the Middle East is another factor affecting our economy.

Clark: 鈥淭he unrest in the Middle East is driving up energy prices, mostly because people don鈥檛 know where that鈥檚 going in the future. And nobody seems to have a clue what country is next in the Middle East.鈥�

A senior economist at IHS Global Insight said: 鈥淲hen food and gasoline prices are rising, it causes people to hunker down. And Clark says the cut in Social Security taxes isn鈥檛 having the effect the government had hoped for, because of rising gas prices.

Clark: 鈥淥ne of the things the U.S. government did at the beginning of the year to try to improve the economy was to cut our Social Security taxes 2 percent. But instead of spending that money on stuff made in the U.S., now most of that鈥檚 going toward buying gasoline.鈥�

Unlike some other kinds of spending, paying more for gas doesn鈥檛 help the economy much. Most of the money goes overseas, and higher prices leave people with less money to buy appliances, computers, plane tickets and other things that can be postponed.

The Social Security tax cut will give most households an additional $1,000 to $2,000 this year. In December, when President Obama signed it into law, economists predicted higher take-home pay would lead to more spending and stronger economic growth.

But gas prices have jumped more than 50 cents a gallon this year. The fact is, external events will always affect our economy, according to Clark.

Clark: 鈥淒espite all we know about the economy and all the things that a variety of people have been doing to try to make things better, we鈥檙e still always going to be at the mercy of outside events.鈥�

Some of the earlier enthusiasm for a strong economic recovery has waned, as Clark explains.

Clark: 鈥淎 couple of months ago it looked like we were really going to be moving into a recovery this year, but now it looks more like we鈥檙e, at best, going to be just treading water, staying where we are, but unemployment not dropping significantly.鈥�

There鈥檚 also a psychological factor when gas prices, a consumer necessity, keep rising. Those higher prices tend to rattle consumer confidence. People feel poorer, and they鈥檙e less likely to spend freely.

Ultimately, less spending can hurt job growth because businesses will feel less confident. Chris Christopher Jr., senior economist at IHS Global Insight, said a rise of 25 cents a gallon in gasoline prices, if it persisted for an entire year, could cost the economy 270,000 jobs.

Thanks for listening. Until next time, this is Joe Kleinsasser for 成人头条.