WASHINGTON — The U.S. economy grew at a sluggish 1.3 percent annual rate in the April-June quarter, held back by the severe drought that reduced farm production in the Midwest.
The growth rate was lowered from a previous estimate of 1.7 percent, the Commerce Department said Thursday.
About half of the downward revision to growth came from a decline in farm production. The estimate for crop production was slashed by $12 billion. But economic growth was also weaker because of slower growth in consumer spending and exports.
Economists said that Midwest drought would likely be a drag on growth in the July-September quarter.
But Paul Ashworth, chief U.S. economist at Capital Economics, said once the drought eases and crop yields rebound to normal levels, the farm sector will provide a boost to economic growth.
Growth slowed from the 2 percent rate in the January-March and isn't expected to exceed that level for the rest of the year. Growth at or below 2 percent is typically too slow to lower unemployment, which was 8.1 percent in August.
Most economists expect unemployment will stay around 8 percent for the rest of this year.
A weak economy and high unemployment could hurt President Barack Obama's re-election chances and bolster Republican nominee Mitt Romney's campaign.
The slow growth and anemic job creation prompted the Federal Reserve earlier this month to take some dramatic steps in an effort to jump-start activity.
High unemployment and sluggish growth prompted the Federal Reserve last week to announce several major steps to boost the economy. Chairman Ben Bernanke said the Fed will buy $40 billion of mortgage-backed securities a month until there is "substantial" improvement in the job market.
- Girls who play with Barbie may not see their...
- Dave Ramsey says: Don't waste your time,...
- Going digital a giant leap for 'dollar theaters'
- Target data breach: Credit monitoring will...
- Salt Lake Bees' stadium renamed Smith's Ballpark
- Demolition underway on major downtown office...
- Uintah County businesses still struggling one...
- Doug Robinson: Gail Miller — Carrying...
- Attempt to raise minimum wage in Utah... 28
- Dave Ramsey says: Don't waste your... 12
- Girls who play with Barbie may not see... 12
- About Utah: He came, he saw, he fit in 8
- Report: Utah made big money by keeping... 8
- Demolition underway on major downtown... 5
- Doug Robinson: Gail Miller —... 4
- Stericycle move to Tooele gets House... 4