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US economic growth slower in Q2

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by Kay Mitchell
”US

The Commerce Department has today revealed the world’s largest economy grew by 1.3% on an annual basis in the April to June period.

The figure was far short of expectations of a reading of 1.8%. However, today’s reading is the first estimate and could be revised up or down in the coming months.

Meanwhile, first quarter growth was sharply revised downwards to 0.4% from 1.9%, casting doubts over the strength of the recovery.

The news resulted in big falls on the stock market with the Dow Jones, the S&P 500 and the Nasdaq all down by around 1% in early trading today.

The figures come as US lawmakers continue tense negotiations to lift the Government debt ceiling and reduce the country’s debt burden.

If Congress is unable to raise the debt ceiling by the deadline of 2 August, the US could default on its debt obligations.

Chairman of the Federal Reserve, Ben Bernanke, has previously warned that the US defaulting on its debt would cause a “major crisis”.

President Barack Obama is due to make a statement about the debt crisis shortly.

Earlier this week, the latest Beige Book report, published by the Federal Reserve, revealed widespread signs that US economic growth is slowing.

The Fed said: “Economic activity continued to grow; however, the pace has moderated in many districts.”

The economic recovery of the US remains sluggish in the face of higher unemployment and a depressed housing market, the report said.

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News posted: July 29, 2011

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