U.S. GDP Grew at 1.3% Rate in Second Quarter

GDPBy MARTIN CRUTSINGER

WASHINGTON -- The U.S. economy grew at a sluggish 1.3 percent annual rate in the April-June quarter, held back by the severe drought that reduced farm production in the Midwest.

The growth rate was lowered from a previous estimate of 1.7 percent, the Commerce Department said Thursday.

About half of the downward revision to growth came from a decline in farm production. The estimate for crop production was slashed by $12 billion. But economic growth was also weaker because of slower growth in consumer spending and exports.

Economists said that Midwest drought would likely be a drag on growth in the July-September quarter.

But Paul Ashworth, chief U.S. economist at Capital Economics, said once the drought eases and crop yields rebound to normal levels, the farm sector will provide a boost to economic growth.

Growth slowed from the 2 percent rate in the January-March and isn't expected to exceed that level for the rest of the year. Growth at or below 2 percent is typically too slow to lower unemployment, which was 8.1 percent in August.

Most economists expect unemployment will stay around 8 percent for the rest of this year.

A weak economy and high unemployment could hurt President Barack Obama's re-election chances and bolster Republican nominee Mitt Romney's campaign.

The slow growth and anemic job creation prompted the Federal Reserve earlier this month to take some dramatic steps in an effort to jump-start activity.

High unemployment and sluggish growth prompted the Federal Reserve last week to announce several major steps to boost the economy. Chairman Ben Bernanke said the Fed will buy $40 billion of mortgage-backed securities a month until there is "substantial" improvement in the job market.

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chris1011

One more time- Business CEO's DO NOT MAKE GOOD POLITICAL LEADERS. Businesses are a Fascist Dictatorship, democratic government is ruled by consensus. This man is so far removed from the reality of an average person, he cannot have the empathy or the experience to make decisions that benefit ALL of the classes or citizens. Throw in a rigid belief in a strict religious dogma, and you have Mitt, the unelectable candidate.

September 28 2012 at 7:40 PM Report abuse -1 rate up rate down Reply
tj1108

Were stuck in Obamanomics, with only one route out. Romney.

September 28 2012 at 1:51 PM Report abuse +2 rate up rate down Reply
1 reply to tj1108's comment
chris1011

One more time- Business CEO's DO NOT MAKE GOOD POLITICAL LEADERS. Businesses are a Fascist Dictatorship, democratic government is ruled by consensus. This man is so far removed from the reality of an average person, he cannot have the empathy or the experience to make decisions that benefit ALL of the classes or citizens. Throw in a rigid belief in a strict religious dogma, and you have Mitt, the unelectable candidate.

September 28 2012 at 7:40 PM Report abuse -1 rate up rate down Reply
chris1011

Here's a video of Romney in his early years at Bain, explaining his purpose in acquiring companies was to "harvest them at significant profit.
"http://www.youtube.com/watch?v=0EsxNYXW5i8&feature=player_embedded

Watch Romney himself explain the purpose of Bain Capital to his fellow shareholders.

No one should be surprised. After all, Bain Capital wasn't in the business of creating jobs. It was in the business of creating profits.

The two goals aren't at all the same -- as Americans whose jobs have been eliminated or whose wages and benefits have been cut know all too well.

For years, higher corporate profits have come at the expense of fewer jobs and lower wages. Business leaders and financiers have been "harvesting" like mad, leaving most Americans behind in the dirt.

September 28 2012 at 12:37 PM Report abuse -2 rate up rate down Reply
1 reply to chris1011's comment
Jetncat

WHO FREAKIN CARES! I want real GDP growth if Romney can do it. LET HIM!

September 28 2012 at 2:01 PM Report abuse +1 rate up rate down Reply
jbwl42

Pretty simple- what is your plan to avoid the fiscal cliff? And what make a rainbow so brillian?

September 27 2012 at 11:29 PM Report abuse rate up rate down Reply
jbwl42

Pretty simple- what is your plan to avoid the fiscal cliff?

September 27 2012 at 11:28 PM Report abuse rate up rate down Reply
joey

The Drought you lying P.O.S It had little effect on the NUMBERS SUCK NOBAMAS ASS!!!!!!!!!!!!

September 27 2012 at 4:12 PM Report abuse +1 rate up rate down Reply
Jetncat

that is worse than the 1.7% they claimed it was.

September 27 2012 at 3:06 PM Report abuse +3 rate up rate down Reply
rich

I don't know of any economist, financial person, business leader or for that matter anyone in or near the white house that is optimistic on the economy. Oh, I also failed to include the average John Doe in this group. Until something happens to alter this situation the country is going nowhere.

September 27 2012 at 1:20 PM Report abuse +1 rate up rate down Reply
1 reply to rich's comment
chris1011

Yeah! Tell the democrats to stop sending drought to the midwest!

September 27 2012 at 6:05 PM Report abuse -1 rate up rate down Reply