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Imports drag down second-quarter US growth

Imports drag down second-quarter US growth
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Economic growth in the United States was weaker than initially thought between April and June.

Gross domestic product grew at a 1.6 percent annual rate during the second quarter, rather than the 2.4 percent estimated in the government’s first reading last month.

Consumer spending was revised higher, but imports surged. They were up 32.4 percent, the largest increase in imports in 26 years, dwarfing a 9.1 percent rise in exports.

In addition companies slowed their rebuilding of inventories from record low levels.

Economists has expected the downward revision would be even greater. Analysts polled by Reuters had forecast GDP would be revised down to a 1.4 percent growth rate.

Growth in new home construction was slightly lower than the initial reading; that follows disappointing reports on housing sales this week.

It all adds to pressure on the White House.

President Barack Obama is on holiday, but aides said he is watching the economic data closely, concerned the slowing economy will hurt Democrats in November’s congressional elections.

Obama has not been able to follow through on his promise to create more jobs.

Businesses – uncertain of the strength of the recovery – remain reluctant to hire new workers,

Stubbornly high unemployment has dampened consumer spending, which normally accounts for 70 percent of US economic activity.

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