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US economic growth hits fastest rate since 2014

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US Economy
The New York skyline. Photograph: Erik Pendzich/REX/Shutterstock

Washington, July 27 (IANS) The US economy grew at the strongest pace in nearly four years during the second quarter, powered by a rebound in consumer spending, exports and firm business investment.

Gross Domestic Product (GDP): the value of all goods and services produced across the economy, rose at a seasonally and inflation-adjusted annual rate of 4.1 per cent from April through June, the Commerce Department said on Friday. That was a pickup from the first quarter’s revised growth rate of 2.2 per cent, the New York Times reported.

Economists surveyed by The Wall Street Journal expected a 4.4 per cent growth rate. The second-quarter growth reading was the strongest since the 4.9 per cent annual rate reported for the third quarter of 2014.

Compared to the second quarter a year ago, output grew 2.8 per cent.

Figures showed that consumer spending rose at a rate of 4 per cent in the second quarter, up from the 0.5 per cent rate seen in the previous three months.

Exports grew at the fastest pace since the fourth quarter of 2013, as companies sought to avoid the new tariffs.

The robust report made it highly likely the Federal Reserve will continue gradually raising short-term interest rates to prevent the economy from overheating. Central bank officials had raised rates twice this year and pencilled in two further increases this year and three in 2019, Efe news reported.

The Fed is widely expected to leave its benchmark rate unchanged at its policy meeting next week and then increase it in September by a quarter percentage point to a range between 2 per cent and 2.25 per cent.

Trade played a large role in the second quarter’s bumper growth. Net exports added 1.06 percentage point to the quarter’s 4.1 per cent GDP growth rate, as exports rose strongly.

Earlier this month, the Commerce Department said US soybean exports surged in the second quarter, delivering an outsize boon to economic growth even as China shifted much of its sourcing to Brazil in response to its worsening trade relations with the US.

The export rally likely reflected efforts by buyers to get their soybeans before China’s 25 per cent retaliatory tariffs on US soybeans, which hit in July.

Government expenditures were up at a 2.1 per cent annual rate in the second quarter.

The $1.5 trillion tax cut passed by Congress late in 2017 was part of President Donald Trump’s plan to boost economic growth to the above 3 per cent annual growth rate that marked the robust expansions of the 20th century.

Friday’s report showed the economy boomed in the second quarter of 2018, although many economists and policymakers believe the pace is unlikely to be sustained in the long run, given the ageing of the population and slow productivity growth of recent years.

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Oil Ministry yet to recover $510 mn from contractors under PSC: CAG

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Dharmendra Pradhan

New Delhi, Sep 23 : The Comptroller and Auditor General (CAG) has said that the Ministry of Petroleum and Natural Gas has not recovered $510 million as cost of unfinished minimum work programme (CoUMWP) from contractors in respect of 45 blocks.

The CAG report on Union Government (Economic & Service Ministries-Civil) – Compliance Audit Observations, which includes important audit findings, was presented in the Parliament on Wednesday.

It noted that the government awarded 254 blocks during the New Exploration and Licensing Policy’s (NELP) I to IX rounds for exploration of oil and gas. As per the terms and conditions of Production Sharing Contracts (PSC), contractors are required to pay the cost of unfinished minimum work programme, if the block is relinquished or terminated by government.

However, contractors of 54 relinquished blocks failed to pay the CoUMWP as specified in the PSCs.

“An amount of $510.79 million (Rs 3,652.64 crore), which was 77 per cent of the Ministry of Petroleum and Natural Gas’s (MoPNG) approved amount of $664.67 million (Rs 4,753.03 crore) on account of CoUMWP in respect of 45 blocks still remained unrecovered (September 2019),” the report said.

It added that the CoUMWP for nine blocks is yet to be worked out by Directorate General of Hydrocarbons (DGH) or yet to be approved by the ministry.

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IT Dept ignored land/flat sellers as ‘potential assessees’: CAG

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real estate

New Delhi, Sep 23 : The Comptroller and Auditor General (CAG) has said that during financial years 2014-15 to 2017-18, the IT Department did not initiate any action regarding land and flat sellers who could be potential assessees.

The Performance Audit on ‘Search and Seizure Assessments in Income Tax Department’, tabled in the Parliament on Wednesday, said: “The Department did not initiate any action in respect of sellers of land/flat/ commodities pointed out in the respective Appraisal Report, who could be potential assessees. The department also did not confirm whether these were in the tax net of the department and regularly filing returns.”

It also said that there were loopholes and deficiencies in the provisions of the Act in respect of search assessments, mainly relating to absence of specific provisions in the Act and Rules, the report said.

“In respect of certain Groups, 76.5 per cent of additions made in search assessments did not stand the test of judicial scrutiny in appeals at the level of CIT (A)/ITAT,” it said.

The report found that assessing officers (AOs), while finalising the assessments, did not take a uniform stand in making additions on account of bogus purchases, accommodation entries and in adoption of figures of assessed income or revised income.

“The additions were made arbitrarily either on lump sum amount basis or different percentage ranging from five per cent to 50 per cent under similar circumstances without proper justification,” the report said.

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IT Dept computed interests wrongly in most assessment cases: CAG

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Direct tax Incom

New Delhi, Sep 23 : The Comptroller and Auditor General of India has said that the Income Tax Department computed interests wrongly in about 77 per cent of the assessment cases it had audited.

In its report on “Direct Taxes of the Union Government for the year ended March 2019”, tabled in the Parliament on Wednesday, the government auditor said that it had audited 6,217 assessment cases which were processed or completed through the AST module and examined the correctness of interest, calculated through the system and modified by assessing officers (AO) with respect to Sections 234A, 234B, 234C and 244A of the Income Tax Act.

The report said that interest was calculated incorrectly through the AST system, despite the fact that the system was designed, inter alia, to undertake assessment functions of calculation of interest under various sections of the Income Tax Act.

“The interest was wrongly computed by the ITD, in 76.68 per cent of cases of the sample of 6,217 selected out of a population of 8,35,727 records, either due to systemic deficiencies or due to incorrect interventions by the AOs,” it said.

Assessing officers also did not take any step to rectify the incorrect interest, under Sections 234A, 234B, 234C and 244A of the Act, calculated through the system, even though the AST system allowed them to modify the value of interest in accordance with the provisions of the Act, thereby leading to either short levy excess levy of interest.

The CAG recommended that the Central Board of Direct Taxies may institute appropriate checks and balances in the Income Tax Business Application (ITBA) to prevent recurrence of error in computation of tax and interest.

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