The United States economy slowed in the second quarter, the Commerce Department announced Friday, heightening concerns about the stagnant pace of the economic recovery.
The gross domestic product, defined as “the output of goods and services produced by labor and property located in the United States” increased at an annual rate of 1.5 percent. The economy grew by 2 percent in the first quarter, revised upward from 1.9 percent. The data, the Commerce Department noted, is incomplete and will be revised in August.
Americans are saving more (4 percent, up from 3.6 percent in the first quarter), but spent less in the second quarter (1.5 percent, down from 2.4 percent in the first quarter), especially on durable goods such as cars and computers. The unseasonably warm winter might have compelled consumers, who comprise 70 percent of the economy, to spend more in previous quarters, and to subsequently hold back on spending in the second quarter.
In addition, the U.S. exported less goods and services than it imported.
The economy needs to grow around 3 percent a year to significantly bring down the unemployment rate, analysts say. Another benchmark is first time claims for unemployment. A reading below 375,000 is generally considered to be an indication that hiring is strong enough to reduce the unemployment rate. Last week, jobless claims dropped 35,000 to 355,000. But analysts cautioned that this due to “seasonal factors.
The Commerce Department Friday also updated its estimates of economic activity for the last three years, which showed less contraction than previously reported. The economy slowed 3.1 percent in 2009, compared to 3.5 percent as originally stated. In 2010, growth was revised down from 3 percent to 2.4 percent. Last year’s growth was put at 1.8 percent, basically unchanged from the previous reported 1.7 percent.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.