The economy grew at a barely perceptible 0.4 percent annual rate during the second quarter, an even worse performance than first thought, the government said Tuesday. Many analysts believe the country is sliding into a recession.
The Commerce Department's revised report on the gross national product - the total output of the nation's goods and services - was the lowest since an 0.3 percent rate was posted in the final quarter of 1989.It was a reminder of how precarious the economy was even before Iraq invaded Kuwait on Aug. 2, resulting in a dramatic increase in the price of oil.
At the White House, presidential spokesman Marlin Fitzwater said the drop in economic growth "is certainly cause for concern."
"It's not good news," Fitzwater said, but he added, "We don't believe we are in a recession now."
Both of the department's two earlier estimates put economic growth at a lackluster 1.2 percent rate from April through June. The final revision was due to lower inventories and fewer exports than first thought.
Additionally, the United States posted a budget deficit of $52.75 billion in August, a huge gain over the August 1989 shortfall of $22.15 billion, the Treasury Department said Monday.
But "$25 billion reflects a shift of payments normally made in September into August to avoid Labor Day delays" of military pay, Social Security checks and other payments, the department said. "This will affect September's results by $25 billion as compared to last year."
August's $52.75 billion shortfall is the worst showing since a staggering $53.35 billion in March and follows a shortfall of $25.93 billion in July and a deficit of $11.13 billion in June.
For the fiscal year, which ends Sept. 30, the United States was running a total shortfall of $241.71 billion at the end of last month, the Treasury Department said.