WASHINGTON - The nation's economy grew at a much slower pace this spring than previously estimated, mostly due to the largest surge in imports in 26 years and a slowdown in companies' restocking of goods.
The nation's gross domestic product - the broadest measure of the economy's output - grew at a 1.6 percent annual rate in the April-to-June period, the Commerce Department said Friday. That's down from an initial estimate of 2.4 percent last month - though it's not as bad as expected - and much slower than the first quarter's 3.7 percent pace.
The lower estimate for economic growth follows a week of disappointing economic reports. The housing sector is slumping badly after the expiration of a government homebuyer tax credit. And business spending on big-ticket manufactured items such as machinery and software, an important source of growth earlier this year, also is tapering off.
Most analysts expect the economy will grow at a similarly weak pace for the rest of this year.
"We seem to be in the early stages of what might be called a 'growth recession ,' " said Ethan Harris, an economist at Bank of America-Merrill Lynch. That means the economy is likely to keep expanding, but at a snail's pace and without creating many jobs.
Harris said he expected the GDP would grow at about a 2 percent pace in the second half of this year. As a result, the jobless rate could rise from its current level of 9.5 percent.
That's "very disappointing relative to a normal business cycle," he said. "Usually you get a bigger bounce back." A healthy economy typically expands at a pace of at least 3 percent each quarter - and after the 1981-82 recession, GDP growth was at more than 8 percent for four straight quarters.
The widening U.S. trade deficit subtracted nearly 3.4 percentage points from second-quarter growth, the largest hit from a trade imbalance since 1947, the government said.
Many economists expect that impact to lessen in the coming quarters. As businesses pare back spending on inventories and reduce investment in new equipment, imports should decline.
The economy has grown for four straight quarters, but that growth has averaged only 2.9 percent, a weak pace after such a steep recession.
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