30 Jul 2012

US economic growth slows

11:13 am on 30 July 2012

The US Federal Reserve is facing growing pressure to do more to bolster the recovery after figures showing economic growth in the second quarter slowed to an annual rate of 1.5%.

Growth in the first quarter was also revised up from 1.9% to 2%, the Commerce Department said.

Details of the report were weak, with foreign trade being a drag and stocks of unsold goods rising.

That, together with signs that activity slowed further early in the third quarter strengthens the argument for the Federal Reserve to offer the economy additional stimulus at its September meeting.

Despite the slowdown, the second quarter growth figures were better than expected and US stocks rallied sharply, the BBC reports.

The main Dow Jones index closed up 188 points, or 1.5%, at 13,076, its highest level since early May.

Separately, in its twice-yearly review, the White House revised down its forecast for growth in 2012 to 2.3% from 2.7%, and in 2013 to 2.7% from 3.