U.S. Economic Growth Slows Sharply in Second Quarter

American's gross domestic output, which expanded at a 2% annual rate in the first three months of this year and 4.1% in last year's fourth quarter, grew at a tepid 1.5% pace from April through June, according to the preliminary estimate from the Dept. of Commerce.

Economists say such slow growth is not enough to sustain a recovery in the job market.

Consumer spending, which accounts for 70% of the economy, rose 1.5% in the second quarter compared to 2.4% in the first quarter. The personal saving rate rose to 4% from 3.6%. The economy was bolstered in the latest quarter by construction growth and annualized increases of 5.3% in exports and 8.5% in business investment.

The Federal Reserve's preferred inflation measure, the core price consumption expenditures index, grew at a 1.8% annual rate. The base PCE index, which includes food an energy prices, rose only 0.7%, chiefly because of easing gasoline prices.

Economists say that the low core rate, which falls short of the Federal Reserve's 2% target, gives the central bank leeway to act to stimulate the economy.