After bolting out of the starting gate at the beginning of the year, the US economy slowed in the spring, growing at an annual rate of just 1.1 per cent.
The Commerce Department's latest reading today on gross domestic product in the April-June quarter was unchanged from its initial estimate a month ago. GDP measures the total value of goods and services produced within the United States and is considered the best barometer of the country's economic health.
The 1.1 per cent growth rate marks a slowdown from the brisk five per cent pace posted in the first three months of the year.
Beyond that, analysts believe the economy picked up a bit in the current quarter, with some estimates ranging from growth rates of around two per cent to three percent. For the second half of this year, some economists are predicting sluggish to moderate growth.
A second report provided fresh evidence of a lackluster job market.
New claims for unemployment insurance rose by 8,000 last week to a seasonally adjusted 403,000, the highest level since July 6th, the Labor Department said. Economists were expecting claims to go down.
The shape of the recovery ultimately will be determined by consumers and the willingness or reluctance of businesses to spend and invest in the months ahead.
Optimists are betting that consumers will keep their pocketbooks and wallets open and that businesses will slowly step up investment, helping along the recovery. Pessimists worry that they won't.
Although most economists don't foresee the economy sliding back into a feared "double dip" recession, the economy's struggles pose a challenge for President Bush and will be a key topic for voters heading into the November elections.
Hoping to give a boost to the recovery, the Federal Reserve has held short-term interest rates steady all year long.
Low rates might motivate continued spending by consumers and induce businesses to increase capital spending and hiring, forces that would bolster economic growth.
In today's report, consumer spending grew at a rate of 1.9 per cent in the second quarter, unchanged from the government's previous estimate, but down from a 3.1 per cent growth rate in the first quarter.
However, spending on nondurable goods such as foods and clothes was revised upward, inching up at a rate of 0.1 per cent, as opposed to a 0.6 per cent rate of decline estimated a month ago. Revised figures showed spending on big-ticket "durable" goods as well as services rising moderately in the second quarter, but a little less brisk than previous estimates.
AP