WASHINGTON – The U.S. economy grew at a 2.5 percent annual rate from April through June, an improvement from the first three months of the year. But economists are worried that growth may now be slowing.
The Commerce Department said Thursday that its final look at economic growth in the spring was unchanged from a prior estimate made last month.
However, the components of growth were altered slightly.
Businesses added a bit less to their stockpiles and exports did not grow as fast as previously thought. These downward revisions were balanced by slightly stronger spending by state and local governments.
Many analysts believe growth is slowing to a sluggish rate at or below 2 percent in the current quarter. Economists had initially hoped growth would improve in the second half of the year.
If economists are correct that economic activity slowed this summer, it would mark the third quarter in the last four that growth rates have been 2 percent or lower. Growth in the fourth quarter of 2012 nearly stalled out at a barely discernible 0.1 percent rate and then improved slightly to 1.1 percent growth in the January-March quarter.
Economists had initially thought that growth would accelerate in the second half of the year behind steady hiring and fading impact from government spending cuts and higher taxes.
But early activity for the quarter has been discouraging. Consumers spent more cautiously in July as their income barely increased. The government spending cuts have weighed on defense spending and business investment. And higher mortgage rates now threaten to slow a housing recovery that had been a solid contributor to growth in the first half of the year.
Even the job gains from earlier in the year appear to be slowing. Employers have added an average of just 155,000 jobs a month since April, down from an average of 205,000 for the first four months of the year.
Analysts are still hopeful that growth will pick up in 2014.