Friday, July 29, 2011

US economy: GDP growth much weaker than thought

S economic growth is much weaker than first thought, government figures show.

The economy grew at an annualised rate of 1.3% in the second quarter, the Commerce Department said. Economists had forecast growth of 1.8%.

And in a surprise move, first-quarter growth was revised down sharply from 1.9% to 0.4%.

There is also much uncertainty at the moment as to how the current row about the US debt crisis will affect its economic recovery.

If Congress does not raise the debt limit by 2 August the US government could face funding shortfalls that it cannot meet by extra borrowing.

President Obama is due to make a statement about the debt crisis shortly.

US markets opened lower, with the Dow Jones, the S&P 500 and the Nasdaq all falling 1% in early trade.

European markets, which were already in negative territory, saw further falls after the figures were released. (more)