The U.S. economy grew at a slower pace that previously estimated during the second quarter as consumers increased spending less strongly and businesses reduced some investments—signs that consumer confidence was falling before the current financial market turmoil intensified. The Commerce Department reported Friday that gross domestic product (GDP) expanded at a 2.8 percent annual rate in the April-June quarter, compared to the 3.3 percent growth it estimated a month ago. Despite the downward revision, second-quarter GDP improved following two extremely weak quarters. In the first quarter, the U.S. economy grew 0.9 percent, and in the fourth quarter of 2007 the economy shrank. According to the report, consumer spending and U.S. exports did not grow as much in the spring as previously thought. Still, export growth was strong and consumers were helped by the government's tax rebates. The new evidence of slowing economic activity came amid confusion in Washington about a plan to rescue U.S. financial firms by having the government use $700 billion to tax money to buy their bad debts.
