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«AgroInvest» — News — GDP Report: U.S. economy slowed in second quarter

GDP Report: U.S. economy slowed in second quarter

2012-07-27 16:56:22

The United States economy slowed in the second quarter amid weak consumer spending, government cuts and a rise in imports from foreign countries.

Gross domestic product, the broadest measure of the nation's economic health, grew at an annual rate of 1.5% from April to June, the Commerce Department said Friday.

That's down significantly from a 2% rate in the first three months of the year.

The Commerce Department also released revisions going back to the start of 2009. While the revisions showed that growth in 2010 was weaker than previously thought, 2009 and 2011 were slightly stronger.

The second-quarter slowdown was not entirely surprising given consumer spending has been weak recently, the government has been cutting its spending and hiring has been tepid. Economists surveyed by CNNMoney were expecting to see 1.4% growth.

The economy needs to grow around 3% a year to bring the unemployment rate down significantly, and since consumer spending accounts for roughly two-thirds of the economy, it too needs to grow around 3%.

But spending grew at a 1.5% annual rate, down from 2.4% in the first quarter, showing that households are continuing to deleverage three years after the recession.

Shoppers cut back on buying big-ticket items in particular.

As usual, the U.S. imported more goods and services from foreign countries than it exported, which subtracts from economic growth.

Spending by businesses remained a strength. Businesses increased their purchases of equipment and software by a 7.2% annual rate, up from 5.4% in the prior quarter.

The Commerce Department stressed that the numbers released Friday were based on incomplete data, and it plans to revise the GDP figures twice in the next few months

 

money.cnn.com