Federal Reserve Chairman Ben Bernanke, left, and Donald L. Kohn, governor of the Federal Reserve Bank of Dallas, converse.
Reed Saxon / AP Enlarge
WASHINGTON - The U.S. economy grew at a slower pace during the second quarter of this year than first estimated, the government reported Friday, another indication the recovery is losing steam and one that prompted Federal Reserve Chairman Ben Bernanke to pledge action if the economy deteriorates further.
Although the Commerce Department's first estimate of the increase in the gross domestic product from April through June had been 2.4 percent, the agency revised that number yesterday to 1.6 percent. That suggests the slowdown from strong 3.7 percent growth in the first three months of this year was more pronounced than had been thought. The agency attributed the revision to stronger-than-anticipated growth in imports, which partially reduce domestic growth.
The Commerce Department's revision came hours before a much-anticipated speech by Mr. Bernanke on his outlook amid darkening views of the economy.
Speaking at the Fed's annual gathering in Jackson Hole, Wyo., Mr. Bernanke restated that the Fed's rate-setting Federal Open Market Committee still anticipates growth. He also indicated he isn't ready to take aggressive actions until there are clearer signs of economic deterioration.
"We will continue to monitor economic developments closely and to evaluate whether additional monetary easing would be beneficial. In particular, the committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly," he said.
While the Fed thinks it has the tools to act, such as buying bonds or lowering interest rates, most steps that can be taken carry costs, and it isn't always clear that the actions will do more good than harm, he cautioned.