The U.S. economy grew at an annual rate of just 1.5 per cent from April through June, as Americans cut back sharply on spending. The slowdown in growth adds to worries that the economy could be stalling three years after the recession ended.
The Commerce Department also said on Friday that the economy grew a little better than previously thought in the January-March quarter. It raised its estimate to a 2 per cent rate, up from 1.9 percent.
Growth at or below 2 per cent isn't enough to lower the unemployment rate, which was 8.2 per cent last month. And most economists don't expect growth to pick up much in the second half of the year. Europe's financial crisis and a looming budget crisis in the U.S. are expected to slow business investment further.
"The main take away from today's report, the specifics aside, is that the U.S. economy is barely growing," said Dan Greenhaus, chief economic strategist at BTIG LLC. "Along with a reduction in the actual amount of money companies were able to make, it's no wonder the unemployment rate cannot move lower."
Some economic data improved over the course of the April-June quarter, while others worsened. Hiring, for example, rose slightly from April to May to June. But home sales weakened.
Stocks opened higher as investors appeared to shrug off the weak U.S growth and focus on a pledge from the European Central Bank president to keep the euro together. The Dow Jones industrial average was up about 70 points in late-morning trading, and broader indexes also rose.
The lackluster economy is raising pressure on
President Barack Obama in his re-election fight with
Mitt Romney , the presumptive Republican presidential nominee.
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