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U.S. economy grows but sluggish pace remains a concern

Jul 29, 2011 9:31:00 AM - thestate.com
WASHINGTON — The U.S. economy grew at an annualized rate of 1.3 percent between April and June, the government said Friday in a report that underscored concerns about the sluggish pace of recovery in an increasingly fragile economy.

The Bureau of Economic Analysis also revised downwards its earlier estimates of growth for the first three months of the year — from 1.9 percent down to 0.4 percent. It means the first half of the year marks the slowest growth since the United States pulled out of recession in June 2009.

The slow second quarter was expected by economists, who warned of residual headwinds from volatile energy prices and spillover effects from the devastating earthquake and tsunami in Japan that disrupted the global supply chain for many manufacturers.

Still, 1.3 percent was on the low end of the range of expectations, and comes on top of a dismal 0.4 percent growth rate for the first three months of the year, a figure that was revised down on Friday. It paints a picture of an economy struggling to maintain forward momentum and calls into question a second-half rebound. The political theater in Washington over the debt ceiling isn't helping to boost confidence in an uncertain economy either.

"The acceleration in real GDP in the second quarter primarily reflected a deceleration in imports, an upturn in federal government spending, and an acceleration in nonresidential fixed investment that were partly offset by a sharp deceleration in personal consumption expenditures," the BEA said in its report.

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