Newspaper article THE JOURNAL RECORD

Economic Growth Lackluster 1.2% in Second Quarter

Newspaper article THE JOURNAL RECORD

Economic Growth Lackluster 1.2% in Second Quarter

Article excerpt

WASHINGTON (AP) - The U.S. economy grew at a lackluster annual rate of 1.2 percent in the April-June quarter, the government said Friday in a report showing widespread weakness even before Mideast turmoil boosted recession fears.

The small advance in the gross national product - the country's total output of goods and services - served to emphasize just how close to a recession the economy is skirting.

Many economists are now forecasting an imminent economic downturn. The forecasts are based on a belief that higher oil prices in the aftermath of the Aug. 2 Iraqi invasion of Kuwait will rekindle inflation and end the peacetime record of nearly eight years of economic growth.

The 1.2 percent GNP growth in the second quarter was especially disappointing because it represented no change from an initial GNP report one month ago.

The inflation picture was unchanged in Friday's report, with a price index tied to the GNP rising at an annual rate of 3.9 percent in the second quarter.

Economists believe inflation will worsen significantly in the third quarter, reflecting the higher prices Americans are now paying for gasoline and other forms of energy.

The 1.2 percent GNP growth in the second quarter represented the fifth consecutive quarter in which the economy expanded at an annual rate below 2 percent, a pace far below the level economists believe is necessary to keep the unemployment rate from rising.

The second quarter growth was the weakest since a 0.3 percent advance in the fourth quarter of 1989. The GNP had advanced at an annual rate of 1.7 percent in the first quarter, giving the country a 1.5 percent growth rate for the first half of the year. …

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