Economic Growth Slowed During the Second Quarter --- Latest U.S. Data Also Show Surge in New Home Sales, Decline in Jobless Claims
WASHINGTON -- Economic growth in the second quarter shrank to half the pace of the first period, the Commerce Department said, while new figures showed the recession was deeper and longer than previously thought.</br></br>The economy grew at an annual rate of 1.4% in the second quarter after rising at a 2.9% in the first period, according to the agency. And revised figures released yesterday show that the economy contracted by 1.6% in the third quarter of 1990, instead of growing 0.2%. That means the record books now show that the economy declined for three quarters in a row before turning upward in the second quarter of 1991.</br></br>But there was some good news yesterday about the more recent state of the economy: new home sales surged 7.9% in June, the department said, and new claims for unemployment benefits fell by 21,000 in the week ended July 18, according to the Labor Department.</br></br>"The picture we are seeing is of an economy that has slowed down considerably," said Sung Won Sohn, chief economist of Norwest Corp. in Minneapolis, about the second-quarter figures. "The first quarter was a late Christmas, the second quarter is early summer doldrums."</br></br>Bush administration officials insisted the disappointing second quarter doesn't damp their hopes for stronger growth for the rest of the year. "This sawtoothed pattern of growth is usual early in recoveries and consistent with the expected improvement in the second half of the year," said Michael Boskin, the president's chief economic adviser.