Revised second-quarter US GDP (gross domestic product) figures released this morning by the Commerce Department show the economy grew at a much weaker than expected pace in the second quarter of 2010.
The nation's output of goods and services rose at an annual rate of only 1.6% in the quarter ended June 30. That's a significant drop from the 3.7% annual rate of GDP growth in the first quarter.
The bulk of the GDP increase for the quarter came from increased government spending at all levels and nonresidential building construction. Personal consumption also rose, but so did imports, which are a subtraction from the GDP.
Weaker US GDP growth caps a week of economic bad news
The downward revision in second-quarter GDP growth from preliminary figures released last month capped a week of economic bad news that included sharp declines in new and existing home sales and unemployment that remained at a stubbornly high 9.5%.
The new GDP figure suggests that the unemployment rate won't be going down anytime soon. Worse still, it likely will not rise either, as it usually does once employers resume hiring on a large scale. Weak growth likely means that jobs will continue to be added too slowly to absorb all the job-seekers who are unemployed, underemployed or discouraged and thus out of the labor force.
The current US GDP figures portend continued losses in the stock market, where the Dow Jones average fell below 10,000 yesterday on the week's bad economic news to date, and continued disappointment among consumers, likely reinforcing the vicious cycle triggered by this week's news.
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