Growth rate drops by half in 2d quarter

0 Comments | Philadelphia Inquirer, The, July, 2006

The U.S. economy grew at a below-forecast annual rate of 2.5 percent during the spring, the Commerce Department said yesterday.

The growth rate was less than half the pace of the prior three months, strengthening speculation that the Federal Reserve would not raise interest rates at its next meeting.

That hope - after 17 rate hikes in the last 25 months - fueled a rally on Wall Street, with major indexes climbing more than 1 percent each.

The growth for gross domestic product in the April-to-June quarter compared with an increase of 5.6 percent in the year's first quarter. That economic expansion during the winter was the fastest in 21/2 years, and reflected energetic spending and investment by people and businesses alike.

But in the second quarter,...