US growth revised to 1.6 percent in second quarter


Washington : The US economy slowed markedly in the second quarter of this year, growing by an annualised 1.6 percent according to a downwardly-revised government estimate Friday.

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The commerce department’s revision reflected a sharp rise in imports and confirmed that the US recovery from recession has weakened in the past few months. The department last month estimated the second quarter’s economic output at 2.4 percent.

The slowdown comes after growth of 3.7 percent in the first three months of this year. Yet the revision was a little better than a 1.4-percent growth rate for April-June that economists had expected.

Fears of a weakening recovery drove the Dow Jones Industrial Average back below 10,000 points Thursday for the first time since early June and will put more pressure on President Barack Obama to take more measures to keep the recovery alive.

“The case for more action from policymakers to support the recovery and return the job market to health is now overwhelming,” said Josh Bivens, an economist with the Economic Policy Institute.

Federal Reserve Chairman Ben Bernanke was expected to outline whether the central bank planned any more actions to stimulate the economy in a much anticipated speech later Friday.

The commerce department’s estimate Friday was its second for the quarter. A final growth estimate will be released Sept 30.

The lower growth has been driven by high unemployment, a weak housing market and widening trade deficit. On the positive side, the department said consumer spending, which accounts for about two thirds of output, increased two percent in the quarter.