Gross domestic product expanded at an annual rate of 1 percent the Commerce Department said, a downward revision of its prior estimate of 1.3 percent. It also said after-tax corporate profits rose at the fastest pace in a year.
Economists had expected GDP growth to be lowered to 1.1 percent. The economy advanced just 0.4 percent in the first quarter. The second GDP estimate for the quarter confirmed growth almost stalled in the first six months of this year.
“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?”
The United States is on a recession watch after a massive sell-off in the stock market knocked down consumer and business sentiment. The plunge in share prices followed Standard & Poor’s decision to strip the nation of its top notch AAA credit rating and a spreading sovereign debt crisis in Europe.