Over the past year, the American economy has grown only 1.2 percent, the smallest increase in the nation's output since the last recession ended 7 1/2 years ago, the Commerce Department reported yesterday.
The economy grew at the same slow pace during the April-June quarter, and the weakness was pervasive, the department said. Consumer spending, business investment in new plants and equipment and housing construction all declined, after eliminating the effect of price increases.
In addition, the deficit in U.S. trade in goods and services also worsened, which meant that more of what Americans bought was supplied by foreign producers.
With such a broad decline in sales, most of the increased output during the April-June quarter ended up as unsold goods at factories, warehouses or stores.
"This is not a lively economy," observed Allen Sinai, chief economist of the Boston Co., a financial advisory firm. "This is a very dull, slow-growing economy," he said, echoing a spreading feeling among Americans, as shown by recent polls, that the U.S. economy is struggling to keep on its feet.
The Commerce Department also reported that the gross national product -- measuring the output of goods and services -- grew less strongly than previously reported during 1989 and in the first quarter of this year.
The revisions may add to pressure on the Federal Reserve to reduce interest rates to bolster future growth. Treasury Secretary Nicholas F. Brady and other senior Bush administration officials have been urging the central bank to pump more money into the economy.
Earlier this month, the Fed lowered a key short-term interest rate by a quarter of a percentage point, but Fed Chairman Alan Greenspan strongly hinted no further easing moves were imminent.
As weak as the lastest GNP figures are, however, they indicate that the economy is still growing and has not entered a recession, though some regions, such as New England, are facing rising unemployment, plant and office closings, an increase in bankruptcies and other signs of economic distress, economists said.
While the rate of increase in real GNP fell from 1.7 percent in the first quarter to 1.2 percent in the second, the rate of inflation also dropped from 6.6 percent to 3.9 percent, "a fact that bodes well for continued economic expansion," said Michael R. Darby, Commerce Department undersecretary for economic affairs.
The Bush administration expects "a rebound in economic activity in the second half of the year, especially in the fourth quarter," he said.
That rebound will be fed by a rising demand for U.S. exports abroad and on business investment here, Darby said. "The outlook for solid growth in exports is bright, given growing overseas demand for U.S. goods and services, and emergent export opportunities in Eastern Europe and in Latin America."
Darby said exports declined in the second quarter because of a dip in shipments of computers and related equipment at the same time imports were going up because of rising demand for oil.
Sam Kahan, chief economist for Fuji Securities in Chicago, said of the new array of figures released yesterday: "The important point was that there was a downward revision for 1989. That tells us, in a broad sense, that the economy is not growing as fast as we thought it would be. Things may be slipping beneath our feet."
Altogether, the downward revisions lopped about 1 percent, or about $54 billion, off the level of real GNP in the first quarter, compared with earlier figures.
The revisions, which covered three years, showed that during 1987, 1988 and 1989 the economy grew at an average rate of 3.4 percent rather than 3.8 percent.
A substantial portion of the revision fell in 1989 and was concentrated in consumer purchases of services, particularly medical care services, the department said.
Just as the figures for real GNP were lowered, so were the estimates for personal income. Income from wages, salaries and fringe benefits for 1989 was revised downward by 2.1 percent, or $65.4 billion. At the same time, estimates were raised of income of owners of private businesses. The net of all the changes left personal income 1 percent lower than had been thought.
Since the estimate for personal income was reduced more than that for consumer spending, the changes meant that the personal saving rate also went down. Saving as a share of disposable personal income -- for most individuals that would be essentially the same thing as take-home pay -- for 1989 is now put at 4.6 percent rather than 5.4 percent.
Kahan said the lower saving rate suggests that there will still be "downward constraints on consumer spending" that will hold down future economic growth.
Since the second quarter of last year, consumer spending, adjusted for inflation, has gone up 1.1 percent. In the second quarter, it fell at a 0.3 percent annual rate.
While administration economists believe both exports and business investment will improve later this year, they expect modest gains at best for consumer spending.
Darby also acknowledged that new housing construction is off sharply -- it plunged at a 13.5 percent rate in the second quarter -- and said no recovery in that area is likely any time soon.
The Commerce Department stressed that the figures for the second quarter are estimates based on incomplete data and will be routinely revised twice in the next two months as more information becomes available. In addition, annual revisions are published each July for the previous three years.