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Economic growth lurches to 1.5 percent

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Donald Marron/Bureau of Economiuc Analysis

(Read caption) This chart shows how key sectors of the economy fared in the second quarter of 2012. Housing was a surprising bright spot, but overall growth was disappointing.

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The economy grew at a tepid 1.5% annual rate in the second quarter, according to the latest BEA estimates. That’s far below the pace we need to reduce unemployment.

Weak growth was driven by a slowdown in consumer spending and continued cuts in government spending (mostly at the state and local level), which overshadowed rapid growth in investment spending on housing–yes, housing–and equipment and software:

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Housing investment expanded at almost a 10% rate in the second quarter, its fifth straight quarter of growth. Government spending declined at a 1.4% rate, its eighth straight quarter of decline.