You might have thought that the economy couldn't get much worse. Guess again.
The economy grew less than expected in the second quarter as consumer spending barely rose amid higher gasoline prices, and growth braked sharply in the prior quarter, a government report showed on Friday.
Growth in gross domestic product -- a measure of all goods and services produced within U.S. borders - rose at a 1.3 percent annual rate, the Commerce Department said. First-quarter output was sharply revised down to a 0.4 percent pace from 1.9 percent.
Economists had expected the economy to expand at a 1.8 percent rate in the second quarter.
In addition, fourth-quarter growth was revised down to a 2.3 percent pace from 3.1 percent, indicating that the economy had already started slowing before the high gasoline prices and supply chain disruptions from Japan hit.
Economists had expected the economy would show signs of perking up by now with Japan supply constraints easing and gasoline prices off their high, but data has disappointed. This and the sharp downward revisions to the prior quarters suggest a more troubling and fundamental slowdown might be underway.
It's hard to overstate how dire our economic situation is. The rise of consumer spending was at starvation levels - 0.1% - while other important indices were equally anemic.
What is striking to me is how much growth figures were revised downward from previous estimates. Economic activity is worse than flat. It is at a near standstill which is bad news if you're looking for a job or trying to start a business.
We are very close to tipping back into a recession - if we aren't there already.
Update from Thomas Lifson:
This really isn't that complex. Jerry Sherk of Heritage:
Within two months of the passage of Obamacare, the job market stopped improving. This suggests that businesses are not exaggerating when they tell pollsters that the new health care law is holding back hiring. The law significantly raises business costs and creates considerable uncertainty about the future.
Hat tip: Randall Hoven