The economy in the U.S. grew by just a tepid 1.5% rate during the second quarter of 2012. It lost the momentum that had appeared during the early part of the year. Holding back the growth of the economy was the lack of purchasing by consumers as well as less business investment due to the slowdown globally and much stronger dollar. Analyst had estimated that the rate of growth would be even less, at 1.4%.
The recovery has remained sluggish and makes the U.S. more vulnerable to the troubles in Europe. It also increases the possibility that the Federal Reserve will offer more stimulus. It also showcases the challenge President Obama is faced with during an election year trying to sell his record on the economy to November voters, while there is a slowdown in the recovery.
Due to a slow winter that was unseasonably warm, the economy shrank and then followed what has taken place for the past two years, an increase because of raised hopes, and then households and wary business owners dash hopes when they try to reduce their debt.
During the first three months of this year, the economy increased 2%, said the Commerce Department based on figures released on Friday that were revised. Its previously had been estimated at 1.9%.
One analyst said that not all the blame can be placed on Europe and China. There are problems domestically such as the asset and credit bubble that has been popped. Recovering from that is a process that is both long and painful, the analyst said.
