The nation's economic recovery lost speed in the spring quarter, growing at a 2.4 percent annual rate after surging by 3.7 percent in the winter, the Commerce Department reported Friday morning.
The slowdown was primarily the result of people buying more imports rather than goods made in the United States, as well as less inventory stocking by businesses. Both those trends are expected to continue in the current quarter, further slowing growth.
The underlying economy is growing quite weakly when the restocking figures are excluded -- posting a 1.3 percent growth rate in the second quarter from April to June after inching ahead by 1.1 percent in the first quarter from January to March. The special impetus the economy has enjoyed since last year from inventory rebuilding is largely coming to an end, and is further weakening growth this summer, economists say.
Spending by consumers -- which usually is the biggest engine of growth in the economy -- also has been anemic, growing by 1.6 percent in the spring after a gain of 1.9 percent in the winter. Consumers have been setting aside more of their income to replenish their depleted savings, driving the savings rate up to 6.2 percent.
"The weak labor market is standing in the way of a stronger recovery," said Harm Bandholz, economist at Unicredit Markets. Consumers are cautious about spending because nearly one in 10 workers is out of a job, their unemployment checks are starting to run out and unemployed workers are having great difficulty finding jobs.
The economic recovery reached its first anniversary this summer, but it is weakening because the growth in jobs since the beginning of the year has not been strong enough to support it, Mr. Bandholz said.
"While we do not expect a double-dip recession, we think that economic growth will slow even further from its already modest pace," he said. The growth of about 3.5 percent in the economy since the beginning of the recovery last summer has been "much too little in light of the massive slump between early 2008 and mid-2009."
The Commerce Department provided new estimates showing the Great Recession was even deeper than previously thought. The economy posted no growth at all during 2008 -- which was a full year of recession -- and it actually contracted by 2.6 percent for the full year 2009 despite a late-year surge in growth as the economy broke out of recession.
The total loss of output from the final quarter of 2007 to the second quarter of 2009 was 4.1 percent -- larger than the 3.7 percent Commerce previously estimated because the collapse in the housing market and consumer spending was worse than originally thought.
Support from a gushing spigot of federal stimulus spending appears to have been critical in fueling the meager growth in recent quarters. Federal non-defense spending spurted by 13 percent in the spring after growing around 5 percent the two previous quarters.
But the push from federal stimulus also is ending, and state and local governments are starting to retrench with big budget cuts once again.
"The recovery act will provide very little boost going forward," said Josh Bivens, analyst at the Economic Policy Institute. He predicted that lingering high unemployment will "plague the economy for years to come."
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