Economic Growth Slows to 1.6% Pace

The economy grew at a much slower pace this spring than previously estimated, mostly due to the largest surge in imports in 26 years and a slower buildup in inventories.

The nation's gross domestic product - the broadest measure of the economy's output - grew at a 1.6 percent annual rate in the April-to-June period, the Commerce Department said Friday. That's down from an initial estimate of 2.4 percent last month and much slower than the first quarter's 3.7 percent pace. Many economists had expected a sharper drop.

The widening trade deficit subtracted nearly 3.4 percentage points from second quarter growth, the largest hit from a trade imbalance since 1947, the government said.

The report confirms the economy has lost significant momentum in recent months. Most analysts expect the nation's GDP will continue to grow at a similarly weak pace in the current July-to-September quarter and for the rest of this year.

The economy has grown for four straight quarters, but that growth has averaged only 2.9 percent, a weak pace after such a steep recession. The economy needs to expand at about 3 percent just to keep the unemployment rate, currently 9.5 percent, from rising.

Business investment in new machinery, computers and software drove much of the growth last quarter, increasing nearly 25 percent.

But much of that spending involved the purchase of imported goods. Imports surged 32.4 percent, the most since 1984. That overwhelmed a 9.1 percent increase in exports.

Consumers spent a bit more in the second quarter than previously estimated. Their spending rose at a 2 percent annual rate, slightly higher than the first quarter's 1.9 percent.

Economists expect many other supports for economic growth to fade. Federal government spending and the housing sector bolstered the economy last quarter, but housing has slumped again and will likely drag growth down in the third quarter. The impact of the federal government's $862 billion stimulus package is also projected to taper off this year.

There are few other signs of strength. Even business investment is expected to drop, as a report earlier this week showed that business orders for capital goods fell in July.

The government's GDP report measures the economy's output of goods and services and covers everything from autos to haircuts. Friday's report is the second of three estimates the government makes each quarter.

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jerrym930

This quote came from the Czech Republic . Someone over there has it figured out. We have a lot of work to do. "The danger to America is not Barack Obama but a citizenry capable of entrusting a man like him with the Presidency. It will be far easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a depraved electorate willing to have such a man for their president. The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails America . Blaming the prince of the fools should not blind anyone to the vast confederacy of fools that made him their prince. The Republic can survive a Barack Obama, who is, after all, merely a fool. It is less likely to survive a multitude of fools such as those who made him their president."

August 27 2010 at 8:48 PM Report abuse +3 rate up rate down Reply
LEE Resolution

rhineht 3:41 PM Aug 27, 2010 * (0) vote this comment up * (0) vote this comment down * Each time we buy goods that are not made in USA we slow down our economic growth. T **************** Silly nonsense. Economics just isn't part of your resume......... See full article from DailyFinance: http://srph.it/cox3QX

August 27 2010 at 6:27 PM Report abuse -2 rate up rate down Reply
rhineht

Each time we buy goods that are not made in USA we slow down our economic growth. The people can take charge if we buy goods that are made here by American workers.

August 27 2010 at 3:41 PM Report abuse +2 rate up rate down Reply
laurenstoned7

Time to remove all subsidies for any and all companies who run operation outside the US!

August 27 2010 at 3:05 PM Report abuse +4 rate up rate down Reply
Karl Hammerle

This is to be expected considering the socialist occupying the White House. His continued attacks on capital, desire for increased taxes and higher spending are the exact opposite of what is needed for any economic recovery. Hopefully the November elections will remove his helpers from power in Congress, halting his plans until he is replaced in 2012, if not sooner via impeachment for malfeasance and gross incompetancy.

August 27 2010 at 2:00 PM Report abuse +5 rate up rate down Reply
mckenziecolt

IT'S ALMOST TO LATE/////IF YOU MAKE DON'T MAKE IT HERE******YOU CAN'T SELL IT HERE......................

August 27 2010 at 1:57 PM Report abuse +4 rate up rate down Reply
1 reply to mckenziecolt's comment
rhineht

I agree with you. Buy only products made in USA. Otherwise use what you have or check out thrift stores. Most of the things we buy we don't really need, anyway.

August 27 2010 at 3:28 PM Report abuse +1 rate up rate down Reply
Dave

Our dear leader, peace be upon him, has caused all of this, and he knows what he is doing. He is forcing our country into a socialist society, and he is using Saul Alinski's "Rules for Radicals" as his playbook. How are we allowing this non-citizen Muslim to do this to our country? All I can say is, watch out in November, when the fed-up patriots of our nation go to the polls and straighten this mess out. Can you say "One term, lame-duck president?"

August 27 2010 at 1:48 PM Report abuse +5 rate up rate down Reply
1 reply to Dave's comment
qyqq

Okay, you guys can have Congress for two years. The result will be another Democratic landslide in 2012.

August 27 2010 at 2:03 PM Report abuse -4 rate up rate down Reply
dray907023

I GUESS THEY JUST DO NOT GET IT . THE PARTY IS OVER . FIRST THEY SAID CRAZY HOUSING PRICES WILL NOT FALL . THEN THERE WAS NO SUCH THING AS A RECESSION . THEN IS NO SUCH THING AS A DOUBLE DIP . PEOPLE HAVE STOPED SPENDING MONEY ON GOODS AND SERVICES . CREDIT CARD COMPANIES JACKING RATES AND LOWERING CREDIT LIMITS HAVE SPOOKED THE CONSUMER FOR YEARS TO COME .

August 27 2010 at 1:39 PM Report abuse +5 rate up rate down Reply
taproompa

In Portland, Oregon, a 7-year-old girl's lemonade stand was shut down by the police because she didn't get a $120 business license. On the bright side, by closing her business, she's now eligible for a $108,000 government bailout.

August 27 2010 at 1:31 PM Report abuse +9 rate up rate down Reply
taproompa

This week in 1861, the first federal income tax was instituted to pay for the Civil War. These days, we don't worry about that kind of stuff. Our wars are paid for by our grandchildren

August 27 2010 at 1:23 PM Report abuse +9 rate up rate down Reply
2 replies to taproompa's comment
jtonkins

along with everything else the government spends on... and not just our grandchildren but their grandchildrens children...

August 27 2010 at 1:38 PM Report abuse +6 rate up rate down Reply
jdrumerrnr

Who has financed the tax breaks for the rich?

August 27 2010 at 10:38 PM Report abuse -1 rate up rate down Reply