Economy slowed sharply in first half of year; recession worse that thought

WASHINGTON - The economy slowed in the first six months of 2011 to its weakest pace since the recession ended. High gas prices and scant income gains forced Americans to sharply pull back on spending. And, the 2007-2009 recession was even worse than previously thought.

The Commerce Department says the economy expanded only 1.3 percent in the April-June period. And it downwardly revised the January-March figures to show growth of just 0.4 percent, the weakest since the recession ended two years ago.

Consumer spending was almost flat this spring. It increased only 0.1 percent, after 2.1 percent growth in the winter. Spending on long-lasting manufactured goods, such as autos and appliances, fell 4.4 percent.

Government spending fell for the third straight quarter. And state and local governments cut spending for the seventh quarter in eight since the recession ended.

REVISIONS SHOW DEEPER 2007-2008 RECESSION

The 2007-2009 recession, already in the record books as the worst in the 66 years since the end of World War II, was even worse than previously thought.

From the start of the recession at the end of 2007 to the end in June of 2009, the U.S. economy shrank 5.1 percent. That is 1 percentage point worse than the previous estimate that the recession reduced total output during that period by 4.1 percent.

The new estimates emerged from the annual revision of economic data prepared by the Commerce Department's Bureau of Economic Analysis and released Friday.