US GDP rises sluggish 1.5% in Q2
Source: Agencies |
July 28, 2012, Saturday
|
Print Edition
Print Edition
THE US economy grew at an annual rate of just 1.5 percent from April through June, as Americans cut back sharply on spending. The slowdown in growth adds to worries that the economy could be stalling three years after the recession ended.
The news isn't good for US President Barack Obama, whose reelection hopes in November have strong ties to the economy, the top issue for voters.
The US Commerce Department also said yesterday the economy grew a little better than previously thought in the January-March quarter. It raised its estimate to a 2 percent rate, up from 1.9 percent.
Growth at or below 2 percent isn't enough to lower the unemployment rate, which was 8.2 percent last month. And most economists don't expect growth to pick up much in the year's second half. Europe's financial crisis and a looming budget crisis in the US are expected to slow business investment further.
"The main take away from today's report, the specifics aside, is that the US economy is barely growing," said Dan Greenhaus, chief economic strategist at BTIG LLC. "Along with a reduction in the actual amount of money companies were able to make, it's no wonder the unemployment rate cannot move lower."
Some economists had thought the estimate would be lower.
The 1.5 percent growth rate in the second quarter was the weakest since the economy, as measured by the gross domestic product, expanded at a 1.3 percent rate in the July-September quarter last year. GDP measures the country's total output of goods and services, from the purchase of a cup of coffee to the sale of fighter jets.
Growth was weaker mostly because consumer spending slowed to a growth rate of just 1.5 percent. That's down from 2.4 percent in the first quarter. Americans bought fewer autos, computers and other long-lasting manufactured goods. Spending on services increased.
Consumer spending, which accounts for 70 percent of economic activity, was offset somewhat by a slightly smaller drag from the government.
The news isn't good for US President Barack Obama, whose reelection hopes in November have strong ties to the economy, the top issue for voters.
The US Commerce Department also said yesterday the economy grew a little better than previously thought in the January-March quarter. It raised its estimate to a 2 percent rate, up from 1.9 percent.
Growth at or below 2 percent isn't enough to lower the unemployment rate, which was 8.2 percent last month. And most economists don't expect growth to pick up much in the year's second half. Europe's financial crisis and a looming budget crisis in the US are expected to slow business investment further.
"The main take away from today's report, the specifics aside, is that the US economy is barely growing," said Dan Greenhaus, chief economic strategist at BTIG LLC. "Along with a reduction in the actual amount of money companies were able to make, it's no wonder the unemployment rate cannot move lower."
Some economists had thought the estimate would be lower.
The 1.5 percent growth rate in the second quarter was the weakest since the economy, as measured by the gross domestic product, expanded at a 1.3 percent rate in the July-September quarter last year. GDP measures the country's total output of goods and services, from the purchase of a cup of coffee to the sale of fighter jets.
Growth was weaker mostly because consumer spending slowed to a growth rate of just 1.5 percent. That's down from 2.4 percent in the first quarter. Americans bought fewer autos, computers and other long-lasting manufactured goods. Spending on services increased.
Consumer spending, which accounts for 70 percent of economic activity, was offset somewhat by a slightly smaller drag from the government.
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