The world's largest economy grew much more slowly than thought in the first half of the year, as business caution, government cuts and some timidity on the part of consumers badly crimped the US recovery.
On top of the shock of a much weaker GDP figure for the three months to the end of June than had been forecast, economists digested a major revision to the first quarter figure.
Whereas Commerce Department data had originally shown the economy growing at an annualised pace of 1.9 per cent in the first three months of 2011, the number was yesterday revised down to just 0.4 per cent.
From that lower base, the economy grew at an annualised rate of 1.3 per cent in the second quarter, which was far from the 1.9 per cent expected by Wall Street. Paul Dales, senior US economist at Capital Economics, said the revisions to previous quarterly figures showed the US economy has not, after all, recovered to the size that it was before the recession and credit crisis.
"What's more, with a fiscal consolidation on the way, growth may be even weaker next year," he said.
Consumer spending, which accounts for about 70 per cent of all economic activity in the US, decelerated sharply to a 0.1 per cent rate in the second quarter – the weakest in two years.
"The inventory rebuilding cycle ended in the middle of last year," said Ryan Wang, economist at HSBC, "and consumption growth has slowed markedly over the last two quarters."
Mr Wang added: "The release shows a weakening trajectory of growth, raising concerns about the possibility of a double-dip in the second half of the year if consumption does not rebound."Reuse content