The 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% annual rate in the April-to-June period, the Commerce Department said today, down from an initial estimate of 2.4% last month and much slower than the first quarter's 3.7% pace. The revision follows a week of disappointing economic reports.
The housing sector is slumping badly, and business spending on big-ticket manufactured items such as machinery and software, an important source of growth earlier this year, is also tapering off. "We seem to be in the early stages of what might be called a 'growth recession,'" said one economist. Still, stock futures rose modestly after the announcement as investors appeared relieved the estimate wasn't lower. Investors now turn their attention to today's 10am speech by Ben Bernanke, which will address what the Fed may do in response to the weakening economy.