Slow growth keeps jobs at a standstill

Recovery prospects whining in neutral. Unemployment needle unlikely to move as momentum hits a wall.

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.

The 1.5 percent growth rate in the second quarter was the weakest since GDP grew at a 1.3 percent rate in the JulySeptember quarter last year. And it shows the recovery is gaining no momentum.

After shrinking 3.1 percent in 2009 in the midst of the recession, the economy grew 2.4 percent in 2010. Last year, growth slowed to 1.8 percent — roughly the same meager pace at which the economy expanded in the first half of this year.

Even in normal times, such growth rates are subpar. They’re especially weak for a recovery that follows a deep recession, when growth is typically much stronger than average.

Annual economic growth of 2.5 percent to 3 percent is needed to create enough jobs just to keep up with an expanding workforce. Healthier growth of 4 percent or more is needed to reduce the unemployment rate significantly.

The government makes three estimates of GDP for each quarter. Each revision is based on more complete economic data.

The sluggish growth rate could make the Federal Reserve more likely to announce some new step after it meets next week. But Paul Dales, senior U.S. economist at Capital Economics, doubts the Fed will act at the meeting.