The nation`s economic growth slowed to a crawl again during the April-June quarter after exhibiting some strength earlier in the year, the Commerce Department said Thursday.
The nation`s gross domestic product advanced at a seasonally adjusted 1.4 percent annual rate during the second quarter, less than half the 2.9 percent growth rate of the first three months of the year.
The deterioration in the GDP, which attempts to measure the total output of goods and services produced within U.S. borders, came primarily from a big downturn in consumer spending.
It decreased at a 0.3 percent rate, compared with a healthy 5.1 percent gain during the first three months of the year.
Even so, the latest slowdown wasn`t as severe as the stall during the fourth quarter of last year, when growth slowed to 0.6 percent. It was seen, however, as a disappointment for President Bush, who is trailing Democratic challenger Bill Clinton in public opinion polls.
Commerce Secretary Barbara Hackman Franklin tried to give the report an upbeat interpretation.
”And I would rather have slow, steady growth than a rapid expansion that fades away quickly,” she said.
Private economists were somewhat gloomy.
”This is unlike any other pattern for the economy in the post-World War II era. There`s no doubt in my mind . . . that this is one of the longest and most painful business cycle downturns in our history,” said Allen Sinai of the Boston Co. Economic Advisers Inc.
On a brighter note, the Labor Department said first-time claims for unemployment insurance dropped to a 21-month low of 400,000 during the week ended July 18.
Analysts cautioned against reading too much into a one-week drop in the claims number, which can swing wildly. They are looking for a sustained decline below 400,000 before they are convinced the job market is improving.
Along with its latest estimate of second quarter GDP, the Commerce Department revised its data back through 1989. It shows the decline in GDP in 1990 and 1991 was longer and more severe than first thought.
The department now says the economy shrank 2.2 percent from the April-June quarter of 1990, before the recession, to the first quarter of 1991. The revision, from a 1.6 percent contraction previously reported, now puts the downturn much closer in severity to the post-World War II average decline for recessions, 2.4 percent.
However, GDP has grown for five consecutive quarters since the turndown;
but the growth rate has been so anemic that unemployment continues to rise.
In the second quarter, in addition to consumer spending, trade proved to be a drag on the economy. Exports fell at a 3.8 percent rate while imports increased at a 6.3 percent rate.
