Revised US growth rate: just 1 percent in second quarter
The US economy grew at a rate of just 1 percent in the second quarter, a slowdown that leaves the nation at risk of tipping back into recession.
The growth rate, reported Friday by the Commerce Department, confirms that the economy has now been bumping along the bottom of the growth scale for two quarters – after a 0.4 percent annualized growth rate in the year's first quarter.
Friday's report was also a downward revision for the April-to-June quarter. (The government's initial estimate, given a month ago, had been 1.3 percent for the quarter.)
Investors had largely anticipated the weak number, so it had little impact on financial markets.
Many economists believe the US can still escape a recession, but the risk remains significant – perhaps 1 in 3, some forecasters say.
In one bit of welcome news, oil prices have declined since the end of the second quarter, which should help consumers spend on other goods and services. Personal consumption accounts for roughly two-thirds of all economic activity.
Consumer spending has shown a decelerating trend for most of this year, falling from 3.6 percent annualized growth in last year's fourth quarter to a 2.1 percent gain in the first quarter, and then a 0.4 percent rise in the second quarter.
Importantly, though, the consumer spending figure reflects an upward revision Friday, after initial estimates showed essentially no growth in the April-to-June period. The bump upward, however, was more than offset by reduced estimates for exports and business inventories, so the overall estimate of gross domestic product was revised downward.
Since the second quarter ended, economic indicators have been mixed. This week, for instance, a report on durable-goods orders for July came in stronger than forecast, but initial claims for jobless benefits were higher than expected.
A Reuters/University of Michigan gauge of consumer sentiment, released Friday, rose a bit for August. But the index remains at very low levels.
