NEW YORK: Concerns about the US economy heading for another summer swoon were mounting even before Friday’s disappointing jobs data. Economists are increasingly predicting 2012 will be another year when growth struggles along at about two per cent. The US is holding up better than Europe, where several countries have slipped back into recession. And there are signs of resilience

in some measures of the economy, especially the manufacturing sector. Still, while American consumers increased their spending in the first quarter, growth in incomes is lagging and businesses began cutting investment earlier this year.And uncertainty about the outcome of presidential and congressional elections in November, coupled with risk of a big hit from tax hikes and spending cuts in 2013 may cause shoppers and employers to pull back. Fear has not gripped the financial markets yet. Stocks fell on Friday, but the benchmark S&P 500 remained a healthy 9.2 per cent this year. Some say optimism is misplaced.“You’ve really got to be whistling past the graveyard to think that all is jolly here,” said Joshua Shapiro, chief US economist at MFR in New York, a global consulting firm.Add in the risk that

Europe’s debt crisis deepens, which would hurt not only US exports but also American banks, and annual growth of around two per cent or less in 2012 may be the best anyone should hope for.Economists at HSBC are telling clients to brace for a repeat of 2011, when the economy started strong but fizzled as the days grew longer and temperatures rose.“Over the next two quarters, we expect growth to average a bit less than one per cent,

reducing the year-over-year growth rate to 1.7 per cent,” Kevin Logan, HSBC’s chief US economist, wrote in a note to clients this week. That is a worrisome prospect for just about everyone —

investors, businesses and consumers, not to mention President Barack Obama, who faces a tough re-election battle.

It could also persuade the Federal Reserve, which expects growth to land somewhere in a 2.1 per cent to three per cent range this year, to launch a third round of bond buying in the hope of

further lowering rock-bottom borrowing costs.

The central bank has poured more than USD two trillion into the financial system through bond purchases. That has helped lower long-term interest rates and added to a market rally.

NOT ALL

GLOOM-AND-DOOM

Data on Friday showed the economy added 115,000 new jobs in April, far fewer than expected on Wall Street and a

further slowdown from disappointing gains in March. Employers added more than 200,000 jobs a month from December through February, leading markets to hope the economy was finally turning a corner.Not everyone has given up hope. The consensus among Wall Street economists before Friday’s report had the economy expanding at about 2.2 per cent between April and June, matching the first-quarter pace. Recent data has indeed painted a mixed picture. This week alone, reports showed growth in manufacturing and a decline in new applications for unemployment benefits, while there was a sharp weakening in the service sector and the decline in hiring.

Economists at Credit Suisse said the pullback in hiring after the winter surge should come as no surprise. Indeed, many economists, including Fed Chairman Ben Bernanke, have said an unseasonably warm winter may have driven the quicker pace of hiring at the start of

the year.“We interpret this as consolidation, not the start of a prolonged slowdown,” Credit Suisse said of Friday’s data in a note to clients.

JP Morgan Economist Bruce Kasman conceded that the economy was going through a soft patch but said he expects job gains to average 200,000 per month for the year and the economy to expand by 2.5 per cent. Still, even at 250,000 new jobs a month, it would take about eight years to roll unemployment back to the five per cent rate at the end of 2007.“We expect weak hiring and uninspiring growth,” said David Semmens, US economist at Standard Chartered, who expects growth of 1.7 per cent this year.NO STRAIGHT LINES

One reason the eco-nomy may struggle, according to Neil Dutta, US economist at Bank of America-Merrill Lynch, is that wage growth

simply is not keeping pace with consumer spending. Adjusted for inflation, personal income grew at a slender 0.4 per cent rate in

the first quarter, while consumer spending, which accounts for about 70 per cent of economic activity, rose 2.9 per

cent. That means consumers are not doing much saving, which cannot continue if incomes remain stagnant, he said. Likewise, Dutta expects firms to restock shelves at a slower pace in the second quarter.