Lackluster consumer spending marks weak growth

(CBS News) We learned on Friday that the economy is slowing down. The government reported a weak growth rate in the second quarter of just 1.5 percent -- down from 2 percent in the first quarter.

Here's one reason it matters. In the first quarter, the economy was creating, on average, 226,000 jobs a month -- still not great -- but by spring, that plunged to 75,000 jobs a month, and that isn't nearly enough to bring down the unemployment rate. What's gone wrong?

Consumer spending grew by just 1.5 percent this spring, the weakest in a year, and not nearly enough to jump start growth and create jobs.

MoneyWatch: GDP report: Numbers suggest a long economic slog lies ahead

"Right now, we are at highest risk of a second recession that we have had since the financial crisis began," said economist Diane Swonk.

The economy has to grow by at least 2 percent to create new jobs for people like the ones we met at a New York job fair.

"I've been looking for work for six months now," said Richard Burghard, who lost his job at a men's clothing store.

His 30 years of sales experience has not helped him land a job and he's 56 years old. "A little grueling," he said. "Sometimes you have doubts that somebody wants to hire you because of your age," he said.

American business has created almost 1 million jobs this year. But more than 8 million were lost in the Great Recession.

"We have sub-par growth and a vicious cycle of hesitation and uncertainty because no one is quite sure what is going to happen next," said Swonk.

The latest CBS News/New York Times poll found 7 in 10 Americans say the economy is in bad shape.

A day at the races was cheap entertainment for Dawn Bombicino and her family in Arlington Heights, Ill. It cost them $12 to get in.

"We've learned how to adjust to lower economy through the years," she said. "You learn how to cut back on areas you don't need to spend anymore."

But no one is betting on more stimulus from Washington or a quick resolution to Europe's financial crisis. A sudden rebound in consumer confidence is a long-shot.

"It's people's expectations about the future that are the most damaged right now," said Swonk."

And it's just not consumers sitting on the sidelines. Many companies are still holding off on hiring because they don't want to go through layoffs again if the economy does slip back into a recession.

Watch CBS News Chief Washington correspondent and "Face the Nation" host Bob Schieffer talk to "Evening News" anchor Scott Pelley about the current economic numbers and their impact on President Obama:


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