Gross Domestic Product or GDP for the April-June period was first reported as growing at a 1.9% rate. Analysts polled by Reuters were expecting the annual rate to be revised to 2.7%. GDP grew at a sluggish 0.9% rate in the first quarter after a 0.2% contraction in the final three months of 2007.
The fourth quarter of last year was the weakest since July-September 2001, when the economy was in recession. Consumer spending, which fuels two-thirds of the US economy, grew at an upwardly revised 1.7% rate rather than the 1.5% pace first reported.
Meanwhile, exports grew at a 13.2% annual rate instead of the 9.2% pace initially estimated. Many analysts believe that exports and consumer spending, which have helped the economy skirt recession, are likely to taper off in the second half of the year as spending from government stimulus checks dries up and weakening global growth and a stronger US dollar crimp demand from abroad.
In evidence the severe housing slump continues to weigh on the economy, residential construction was down by an annual 15.7% pace, slightly more than the 15.6 % decline reported earlier. Meanwhile, inventories dipped at an annualised $49.4 billion in the quarter, rather than the $62.2 billion drop first reported, a possible sign that businesses are less pessimistic than believed.
However, the number of US workers filing new claims for jobless benefits fell by 10,000 last week, government data on Thursday showed, but remained at elevated levels indicating a weak labour market. Initial claims for state unemployment insurance benefits declined to a seasonally adjusted 425,000 in the week ended Aug 23 from a revised 435,000 the prior week, the Labour Department said. It was the lowest reading since the week of July 19.