U.S. economy grew 1.3 percent in second quarter

The U.S. economy grew 1.3 percent in the second quarter amid slower consumer spending, the Commerce Department said Thursday, Sept. 27, 2012. / Justin Sullivan/Getty Images

(AP) WASHINGTON - The U.S. economy grew at an even more sluggish pace in the April-June quarter than previously believed as farm production in the Midwest was reduced by a severe drought.

The overall economy grew at an annual rate of 1.3 percent in the spring, down from its previous estimate of 1.7 percent growth, the Commerce Department said Thursday. The big revision reflected that the government slashed its estimate of crop production by $12 billion.

About half of the downward revision to growth came from the decline in farm inventories. But other areas were weaker as well including slower consumer spending and less growth in exports.

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The 1.3 percent growth in the spring followed a sluggish 2 percent growth rate in the first quarter, rates too slow to lower unemployment. The unemployment rate was 8.1 percent in August. Most expect it to stay around 8 percent for the rest of this year because they anticipate little pickup in growth.

Before Thursday's revision in the April-June figures, the consensus view was that the economy expanded in the July-September quarter at a lackluster pace of between 1.5 percent to 2 percent. They expected the final three months of the year will be about the same. For all of 2011, the economy grew 1.8 percent.

A weak economy and high unemployment could hurt President Barack Obama's re-election chances and bolster Republican nominee Mitt Romney's campaign.

The slow growth and anemic job creation prompted the Federal Reserve earlier this month to take some dramatic steps in an effort to jump-start activity.

The Fed announced it was launching a third round of bond purchases in an effort to push long-term interest rates down further to stimulate home purchases and other economic activity. The Fed said it would buy $40 billion each month in mortgage-backed securities and would keep up the purchases and possibly expand them until the job market showed significant improvement.

Opponents of the program, including some on the Fed, have argued that the effort will have little impact, given that interest rates are already so low, and could wind up causing inflation troubles down the road.

[jtni1]

Figures lie! How many thousands of people have given up in disgust about applying for a job. Add them to the unemployment rate. Get true figures!

[lrb1414]

There is one poster who blames global warming for the lackluster GDP. First, I thought it was climate change? Second, please tell me you're not serious. We could ask the business people what they think, and they report in survey after survey that uncertaintly created by an activist government, regulations, and taxes are what are creating caution and an unwillingness to invest, hire, and grow. Actually, no, I'm going to believe that the polar ice caps are causing the problem.........

[lrb1414]

And, for those who say Obama hasn't had enough time, I'd like to point out that in 1984, at the same point in time during Reagan's presidency, GDP was around 6.5-7.1% because REAGAN DID THE EXACT OPPOSITE OF OBAMA!!!!

[all-gores]

We don't need the economy.

All we need is Obama & the govt !!!

The polls are all in agreement - Obama wins !!!

[CaptainSmollett]

In viewing all the comments here, it is notable that only conservatives are reading this article and underatanding the dire implications.

[CaptainSmollett]

This is one of the most important economic and political headlines in months, yet it gets second billing behind plankton and the Mona Lisa. Wouldn't want to inconvenience Obama supporters with any FACTS, would we CBS?

[chevyhotrod]

by spacengin September 27, 2012 2:44 PM EDT
The GOP is responsible for the drought which was made worse by climate change. The GOP resists any effort to do something about climate change. Since the low GDP figures result from the drought, the GOP is responsible. Hey, they succeeded in hurting Obama's reelection effort. I hope food prices don't go too crazy. So American dry farmers, is Romney going to do anything about climate change? You might consider changing sides to get some action.

_________________________

Now it is President Bush's fault for the weather...lol..lol

Your are completely insane, seek help quickly.

[formerlyluvnut]

BUT it IS growth.

[CaptainSmollett]

formerlyluvnut, you just broadcasted your utter ignorance of economics to the world.

[josephp5]

Obama is not responsible for the debt. Government always grows, but it grew the least under Obama than under any President since Eisenhower. In fact, George W. Bush is the President that grew the government the most! That's normalized to a GDP, by the way---as it should be. George W. Bush started two wars while twice cutting taxes for the rich, and then he collapsed the economy in his last year. Now there are not as many people with jobs to pay taxes, and the rich like Mitt Romney hardly pay taxes anymore. Those are the reasons that the deficit is so high. It has nothing to do with anything Obama did; he's just the one that got stuck with the bill and the job of cleaning up after Bush.

[chevyhotrod]

Standard Democrat talking points, most of which are all lies. The only way anyone can claim that Government grew the least under Obama than under any President since Eisenhower if you ignore all the increases in 2009, which he capped, and continued that increase without any budget for the next 3 years.

Gov. Romney paid more than $2million in taxes in 2011 and about the same in 2010. So paying $2 million in taxes is hardly paying taxes anymore? On what planet does that compute?

[lesserof2evil]

1.3% growth is still way better than a shrinking economy under Bush. Yes I know, math doesn't matter to republicon zombies, that's why you won't see a republiCON con man in the WH any time soon.

[0bama2O12]

This is great news for president Obama. Now the naysayers can eat their own words.

[chevyhotrod]

U.S. economy grew 1.3 percent in second quarter

With real inflation numbers at 3+, the economy is actually contracting.