Economic growth weakest since 1993

Associated Press

WASHINGTON — The U.S. economy endured its weakest growth rate in eight years this spring as companies cut back on investment spending by the biggest amount in two decades.

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Looking for glimmers of hope amid a slowdown that began last summer, many analysts said they believed the country has now passed the maximum danger point for a recession. They forecast steady improvement for the rest of this year.

"I think we have seen the bottom for this economic cycle," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis. "Consumers have prevented the economy from sliding off a cliff, and now they will be getting some help."

Sohn and other analysts pointed to falling interest rates, lower energy prices and the $40 billion in tax rebate checks taxpayers have started to receive as positive developments.

"While we're still skating on the edge of a recession, I think the outlook for the economy is now quite encouraging," said Bill Cheney, chief economist at John Hancock Financial Services in Boston. The current economic expansion is now in a record 11th year.

Many analysts said they looked for growth to rebound to around 2 percent in the current quarter and 3.5 percent in the fourth quarter. They predicted the Federal Reserve would cut rates for a seventh time at its Aug. 21 meeting to help the recovery along.

The 0.7 percent GDP increase, the fourth straight quarter of sub-par activity, was the poorest showing since GDP shrank by 0.1 percent in early 1993. The GDP for the first quarter of this year was revised to a rate of 1.3 percent.