Economy loses speed in spring; more weakness ahead
POSTED: Thursday, September 30, 2010 - 3:00pm
UPDATED: Thursday, September 30, 2010 - 5:17pm
WASHINGTON – The nation's economic growth tailed off sharply in the spring and probably isn't faring any better now.
Gross domestic product — the broadest measure of the economy's health — expanded at a feeble 1.7 percent annual rate in the April-June quarter, The Commerce Department reported Thursday.
That's a notch higher than the 1.6 percent growth rate the government estimated a month ago. The slight change was mostly due to a little more spending by consumers than first estimated. Still, that's not enough to have a major impact on the economy.
The second quarter estimate is a sharp slowdown from a 3.7 percent growth rate logged in the first quarter.
Most economists expect growth to be similarly weak in the July-September quarter, with estimates ranging between 1.5 percent and 2 percent. The government's first report on third quarter GDP will be released Oct. 29. Unemployment — now at 9.6 percent — is expected to stay high or even rise in the coming months.
Americans aren't spending enough to give companies the kind of confidence in the economy that leads to rapid hiring.
Consumers did boost their spending in the second quarter at a 2.2 percent pace. It was a tad better than the government's previous estimate of 2.0. But it is still considered lackluster for this point in the recovery by historical standards. Economists think consumers will spend at a slightly slower pace through the rest of this year.
Consumer spending is important because it accounts for roughly 70 percent of economic activity.