Unemployment could stay high as US economic growth slows

Associated Press

WASHINGTON

High unemployment isn’t going away — not as long as the economy grows as slowly as it did in the April-June quarter.

Weak consumer spending held growth to an annual rate of just 1.5 percent, even less than the 2 percent rate in the first quarter. And few expect the economy to accelerate in the second half of the year as Europe’s financial woes and a U.S. budget crisis restrain businesses and consumers.

The growth estimate Friday from the government suggested that the U.S. economy could be at risk of stalling three years after the recession ended. Economists generally say even 2 percent annual growth would add only about 90,000 jobs a month. That’s too few to keep up with population growth and drive down the unemployment rate, which is stuck at 8.2 percent.

The figures came in the Commerce Department’s quarterly report on gross domestic product. GDP measures the country’s total output of goods and services, from the purchase of a cup of coffee to the sale of fighter jets.

“The main takeaway from today’s report, the specifics aside, is that the U.S. economy is barely growing,” said Dan Greenhaus, chief economic strategist at BTIG LLC. “It’s no wonder the unemployment rate cannot move lower.”

Sal Guatieri, senior economist at BMO Capital Markets, expects the unemployment rate to end this year — and next year — at 8.3 percent. He said he foresees no decline in unemployment because of how tepid he thinks economic growth will remain: 2.2 percent for all of 2012 and 2 percent for 2013.