WORLD NEWS
April 30, 2008
Troubled Times
People are struggling with high prices and low supplies
The cost of living is on the rise and shows no immediate signs of slowing. Faced with higher prices at the gas pump and the grocery store, Americans have cut back on spending. Economists closely watch what people spend because it accounts for more than two-thirds of the nation's economic activity. "The economy is weak but not collapsing," says Lynn Reaser, of the Bank of America's Investment Strategies group.
 |  ANJUM NAVEED—AP A woman gets free food in Islamabad, Pakistan. Nearly half of Pakistan’s population is suffering from a shortage of affordable food. |
The U.S. economy grew by only 0.6% during the first quarter of 2008 from January through March. Analysts gauge a country's economic well being by measuring the value of all goods and services produced in the country. A slow pace of growth means that the economy is weakening. Although 0.6 is sluggish, it shows that the economy is still growing.
But there are other troubling signs about the country's economic health. The housing market continues to slide. New home sales plunged to the slowest rate in nearly 17 years in the past three months. This week, gas prices topped $4 per gallon in some parts of the country. The price of flour and rice has doubled.
The government is working to encourage growth. The Federal Reserve is the central bank for the country. It oversees the nation's banks. On Wednesday, the Fed announced it would cut an important interest rate. Interest rates are the money that people pay to borrow money. Lower interest rates allow people and businesses to borrow money from banks.
President George W. Bush said last week that millions of Americans would be getting tax rebates starting on April 28, sooner than expected. "The money is going to help Americans offset the high prices we're seeing at the gas pump, the grocery store, and also give our economy a boost," he said. The tax rebates are part of a $168 billion package to help the economy grow, which was put into place last February.
A Crisis Felt Round the WorldThe U.S is not suffering the economic pinch alone. Rising fuel prices, unpredictable weather and increased demand for food in India and China have strained the world's food supply. The World Bank says that food prices have risen by about 83% in three years. While many in the U.S. feel squeezed, the crisis is more painful in poorer nations that already suffer from widespread hunger. This desperation has occasionally erupted into violent protests in nations in the Caribbean, Africa and Asia.
The United Nations (U.N.) is creating a task force to tackle the global food crisis. The U.S. and Britain pledged millions of dollars to the World Food Program, which has called for $500 million in emergency funding for food aid programs.
World leaders are also calling for long-term solutions. Malaysia has established a major rice-growing project. The U.N. has developed a $1.7 billion plan to provide seeds for farmers in the poorest countries. "The world can afford this," said World Bank President Robert Zoellick. "I think we've now got the attention of the world community."
