U.S. Confirms Weak 2nd-Quarter Growth

The government confirmed Friday that the economy grew at an anemic pace in the second quarter amid widening concern that a recession is becoming more likely later in the year.

The Commerce Department said the economy grew at a 1.2% annual rate between April and June, unchanged from its previous estimate made last month and down from the first quarter’s 1.7% rate.

Some economists had expected the report on economic activity to be revised upward from July’s initial estimate.

But the overall picture painted in Friday’s report still suggests a slowing economy that will become more lethargic in the second half and likely deteriorate into a recession, economists said.

They said the Middle East crisis, which has induced a sharp rise in energy prices, was likely to spur inflation and could tip the economy into a recession after nearly eight years of continuous growth.

A survey published Friday shows that nearly six out of 10 Americans believe the United States is already in a recession. The New York Times/CBS News poll found that 55% of the public says the economy is getting worse, and pessimism has increased significantly since Iraq invaded Kuwait on Aug. 2.

While the economy grew at a lackluster 1.5% rate in the first half, off from 2.5% in the period a year ago, inflation continued to heat up.

Retail prices rose at a rapid 5.8% clip in the first seven months of the year--before the Persian Gulf crisis--up from about 5.5% in the 1989 period.

Commerce Department officials now say the economy would have to grow at a 2.9% annual rate in the second half to meet the Bush Administration’s target of 2.0% growth for the year.