Soaring Costs of Energy Slow Economic Growth; 'Soft Patch' Expected to Continue

The Washington Times (Washington, DC), April 29, 2005 | Go to article overview

Soaring Costs of Energy Slow Economic Growth; 'Soft Patch' Expected to Continue


Byline: Patrice Hill, THE WASHINGTON TIMES

Record-high energy prices thwarted consumer and business spending in the first quarter, causing growth to fall off to a 3.1 percent pace, the slowest in two years, the Commerce Department reported yesterday.

The oil-induced "soft patch" set in last month when premium crude oil prices soared to more than $58 a barrel in New York trading, and most likely is continuing in the spring quarter, economists say.

Because no one can say how long oil and gasoline prices will stay elevated, it's difficult to predict how long and deep the effects will be on the economy.

Despite a setback in the last week, oil prices remained higher than $50 yesterday, while average gasoline prices remained only pennies below their nationwide record of $2.28 a gallon.

Worries that the slowdown may be long-lasting have plagued Wall Street, where the Dow Jones Industrial Average posted another triple-digit plunge of 128 points yesterday. The Dow is down nearly 800 points from its February high, sinking further with each new report showing a loss of economic momentum.

Some think Wall Street is overreacting.

Although growth is down from last year's robust 4.4 percent pace, it has fallen only to the average rate of expansion since the mid-1980s, noted Richard Yamarone, economist with Argus Research Corp.

"A moderation to 3.1 percent isn't a bad thing," he said, adding that growth continues to be good enough to support the creation of about 155,000 new jobs a month.

Consumers continue to be buoyed by rapid growth in the value of their homes - with housing giving a "blistering" performance of 5.7 percent growth in the otherwise "milquetoast" quarter, he said.

The "wealth effect" from rising home values has bolstered confidence and enabled consumers to finance spending on other items. Thus, spending growth slipped mildly to 3.5 percent from 4.2 percent in the fourth quarter in 2003.

The report showed that businesses were hit harder by the jump in costs for energy and other raw materials - and may have been caught unawares. Business spending on computers and other investments dropped sharply to 4.7 percent from 14.5 percent, while unsold inventories soared by $80 billion - the most since 2000. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Soaring Costs of Energy Slow Economic Growth; 'Soft Patch' Expected to Continue
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.