Business

US economy: Output revised down for April to June

Chart showing US GDP

The US economy grew less than first estimated in the second quarter of 2011, revised figures have shown.

The Commerce Department now says the economy expanded at an annualised rate of 1% between April and March, down from its first estimate of 1.3%.

Its downward revision will increase pressure on both the US government and the Federal Reserve to do more to boost the economy.

But Fed chief Ben Bernanke signalled no new stimulus in a keynote speech.

There had been speculation that Mr Bernanke may pave the way for a third round of quantitative easing: injecting cash into the financial system to try to boost the economy.

But speaking at the annual gathering of central bank bosses at Jackson Hole in Wyoming, he gave no indication of any immediate action but said the Fed's next meeting in September had been extended from one day to two.

Lower exports

On a non-annualised basis, the US economy grew only 0.2% in the quarter, down from the previous estimate of 0.3%.

The lower growth figures comes as US consumer spending remains weak in the face of high unemployment and higher energy bills.

In the first quarter of 2011 the US economy expanded just an annualised 0.4%.

The downward revision for the second quarter came as the Commerce Department said exports only grew 3.1%, down from its first estimate of 6%.

However, it said consumer spending was stronger than first calculated, expanding 0.4% instead of 0.1%.

Even at 0.4%, though, the rise in consumer spending was still the weakest since the last quarter of 2009.

"Consumption still barely had a pulse," said Tom Porcelli, chief US economist at RBC Capital Markets.

Consumer spending is vital to the US, as it accounts for more than two thirds of its economy.

Business spending was revised up to 9.9% from 6.3%.

"We were expecting a bit of a downward revision, which reflects the headwinds on the recovery and all the factors we're trying to wrestle to the ground," said Paul Ballew, chief economist at Nationwide Insurance in Columbus, Ohio.

"We're expecting that things will be marginally stronger in the last part of the year. The question is, are we looking at a fourth quarter recovery?"

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