The sputtering American economy may be headed for a double-dip recession after the government revised the nation's gross domestic product downward for the second quarter to 1.6% from an initial estimate of 2.4%.
The first quarter grew at a 3.7% annual rate, the second quarter 1.6%, and this quarter is not likely to be anything worth bragging about, with economists forecasting growth of only 1.7% . GDP is the value of all goods and services produced in the U.S. and the key indicator of the nation's economic health.
The numbers are numbing -- not nearly strong enough to give the recovery enough stride so that employers will want to hire, consumers will have the confidence to spend, or for businesses to invest robustly in equipment.
Investors will be paying close attention to the Kansas City Fed's economic symposium in Jackson Hole, Wyoming. Fed Chairman Ben Bernanke is expected to speak on the U.S. economic outlook and policy response at 10:00 am ET.
The GDP data follows a series of disappointing reports on the housing sales this week and will add pressure on the Obama administration, which already is worried about a slowing economy ahead of November congressional elections.
A White House official said on Thursday that a vacationing President Barack Obama was watching the economic data closely and may address it publicly.
Imports of goods and services in June grew to their highest level since October 2008, leaving a much wider trade deficit than the government had assumed in its advance estimates last month for second-quarter growth. Economists are at a loss to explain the jump in imports, which occurred at a time when domestic demand is very anemic. Import growth is usually associated with strength in underlying domestic demand.
The slackening economic recovery is a nightmare for the Obama administration and the Democratic Party two months away from crucial mid-term elections that could shift the balance of power in Congress in favor of Republicans. A Reuters/Ipsos poll this week found Obama's approval rating at 45%, overtaken for the first time by a 52% disapproval rating.
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