The U.S. economy's soft patch last spring was a bit firmer than previously thought.
The gross domestic product, the broadest measure of economic output, grew at a 3.3 percent annual rate in the second quarter, the Commerce Department reported yesterday, revising its earlier estimate of 2.8 percent.
Alan Greenspan's "soft patch" might have been less soft thabn he let on earlier this year.
(Ray Lustig -- The Washington Post)
The latest figure, based on more complete statistics, means the economy grew at a solid pace in the quarter but still at the slowest rate in more than a year.
Federal Reserve Chairman Alan Greenspan in July called the noticeable loss of economic momentum a temporary "soft patch" and blamed much of it on the surge in energy costs in May, when oil prices topped $40 a barrel for the first time and the average U.S. price of regular gasoline peaked above $2 a gallon.
"The soft patch appears somewhat milder than previously estimated," Peter E. Kretzmer, senior economist at Bank of America Corp., wrote yesterday in an analysis of the GDP report.
Fed officials said after their meeting last week that economic growth appeared to have "regained some traction" recently, with signs of gains in hiring, consumer spending and manufacturing.
But the rise in energy prices this week, with benchmark U.S. crude oil prices passing $49 a barrel and average gasoline prices exceeding $1.90, has renewed concerns that economic growth may not pick up meaningfully in coming months, and could falter again.
"The economic recovery is slowing," said Peter Morici, a professor at the University of Maryland's business school. He predicted that unemployment will rise if oil prices stay near $50 a barrel. "Higher gas prices and rising health care costs are taxing consumers, and record imports are siphoning sales from U.S. businesses," he said.
With President Bush and Democratic presidential candidate John F. Kerry battling to mold voters' perceptions of the economy in the last weeks of the campaign, the GDP report provided arguments for both sides.
Commerce Secretary Donald L. Evans noted that the revised GDP figure primarily reflected stronger growth in U.S exports and business inventories than earlier estimated.