By Christopher S. Rugaber, AP Economics Writer
WASHINGTON (AP) — The U.S. economy grew at a meager 1% annual pace this spring, slower than previously estimated. The downward revision will likely increase fears that the economy is at risk of another recession.
Fewer exports and weaker growth in business stockpiles led the Commerce Department to lower its estimate for the April-June quarter from its previous rate of 1.3% growth. That means the economy expanded only 0.7% in the first six months of the year.
Nine of the past 11 recessions since World War II have been preceded by a period of growth of 1% or less, economists note. Still, many said the revision hasn't changed their outlook for the rest of this year.
The weaker growth could rattle an already edgy stock market, which has lost 12% of its value since July 21.
Stock futures fell after the report was released.
Economists worry this summer's sell-off on Wall Street could hurt growth in the second half of the year, if consumers and businesses pull back on spending and investment.High gas and food prices have already eroded consumers' buying power. Spending increased only 0.4% in the April-June period, the weakest growth since the final three months of 2009.
The revision showed spending was a bit higher than the government's first estimate of 0.1% growth. But the increase mostly reflected greater spending on health care, insurance and financial services, the government said.
People bought fewer long-lasting manufactured goods, such as autos and appliances. Those purchases fell 5.1% this spring, the biggest drop since the final three months of 2008. That partly reflects a shortage of autos on many dealer lots after the March 11 earthquake in Japan. Consumers spending accounts for 70% of growth.
"Consumption still barely had a pulse," said Tom Porcelli, chief U.S. economist at RBC Capital Markets.