US economy: GDP growth much weaker than thought

US economic growth is much weaker than first thought, government figures show.

The economy grew by a worse-than-expected 1.3% in the second quarter, the Commerce Department said. And in a surprise move, first-quarter growth was revised down sharply from 1.9% to 0.4%.

On Thursday, a key vote in Congress to raise the US debt limit was delayed.

If Congress does not raise the debt limit by 2 August the US government could face funding shortfalls that it cannot meet by extra borrowing.

Economists had expected growth of about 1.8% in the second quarter, now that supply constraints from Japan after the earthquake and tsunami are easing.

The main reason for the lower-than-expected second-quarter figure was that consumer spending virtually ground to a halt, growing by just 0.1%, compared with 2.1% growth in the first quarter.

Compared with the previous quarter, the economy grew 0.3%.

In addition, growth for the fourth quarter of 2010 was revised down from 3.1% to 2.3%, indicating that the economy had already started slowing before the end of last year.