Reporting from Washington — A new government report Friday showed that U.S. economic growth slowed sharply in the spring, providing more evidence that the fragile recovery is losing momentum and is unlikely to generate many jobs anytime soon.
The nation's economy grew at a modest 2.4% annual rate in the April-to-June period, the Commerce Department said in its first estimate of gross domestic product for the second quarter.
That compares with a GDP growth of 3.7% in the first quarter – a figure adjusted up from 2.7% reported earlier. But Commerce officials revised down the growth in the fourth quarter of last year, to 5% from 5.6%, as it did for prior quarters, painting an overall picture of a deeper recession than previous data suggest.
The latest slowdown in real GDP -- the total value of goods and services produced inside U.S. borders after adjusting for inflation -- was widely expected by analysts. The data confirmed a recent softening of consumer spending, and a much weaker trade balance in the second quarter offset continued strong gains in business spending for equipment and software.
Many analysts have forecast even slower GDP growth for the second half of this year, taking into account the increasingly smaller support that the economy is getting from government stimulus and a restocking of companies' inventories that had been slashed during the recession. Some government programs have expired, such as the first-time homebuyers' tax credit, which has set back the housing market. And anemic job growth and the debt crisis in Europe have roiled financial markets, adding to consumers' jitters about spending and businesses' cautiousness about hiring and investments.
"The post-recession rebound is history. We don't foresee a double-dip, but we do expect growth to slow even more markedly, to a 1.6% annualized rate in the second half of the year," said Bart van Ark, chief economist at the Conference Board, a New York-based research group, in a statement Friday. "Such a slower pace is unlikely to sustain strong profit growth, and would also weigh on employment and wages."
Economists at the left-leaning Economic Policy Institute argued that the latest GDP report was more reason for the federal government to provide additional stimulus to keep the recovery on track and ease the pain for millions of unemployed workers.
"Contrary to the often-made claim that the near-term economic future is 'uncertain,' today's report provides near certainty that very high unemployment rates will -- absent aggressive action by policymakers -- plague the economy for years to come," said Josh Bivens, an EPI economist.