Slow growth spurs debate on financial health of U.S.
Economic growth totters ahead at its slowest rate in more than three years.
WASHINGTON (AP) -- The economy has slowed to a snail's pace, growing in the just-finished quarter at the slowest rate in more than three years and stirring fresh debate about the country's financial health heading into the elections.
The Commerce Department reported Friday that economic growth during the July-to-September period clocked in at an annual rate of just 1.6 percent -- a subpar performance that mostly reflected the deepening housing slump. Investment in home-building was cut by the largest amount in 15 years.
That "packed a wicked punch for the U.S. economy ... but it was not a knockout blow," said Stuart Hoffman, chief economist at PNC Financial Services Group.
The fresh reading on the economy, which fell short of the 2.1 percent pace analysts were forecasting, disappointed economists, rattled investors and gave Republicans and Democrats plenty to argue about.
Economic matters are expected to influence voters' choices when they go to the polls Nov. 7.
Falling approval rating
President Bush's approval rating on the economy is at 40 percent, among all adults surveyed in an AP-Ipsos poll. That remains near his lowest ratings. Those surveyed trusted Democrats more than Republicans to handle the economy.
The Bush administration quickly sought to downplay the slowdown in economic activity.
"Everybody expected this. You have a combination of rising energy prices and also rising interest rates, and now you've seen a reverse on both," said White House press secretary Tony Snow.
Commerce Secretary Carlos Gutierrez said that latest GDP figures displayed the economy's resilience even as the housing market has slumped. "I would not panic about this," he said in an interview with The Associated Press.
Democrats countered that the slowdown in economic growth is evidence that the administration and the Republican-controlled Congress are doing a poor job handling the economy.
On Wall Street, stocks sagged.
The third quarter's performance was the weakest since a 1.2 percent growth rate eked out in the first quarter of 2003, when a nervous nation hunkered down for the start of the Iraq war.
The latest reading underscores just how much speed the economy has lost this year.
In the first three months of this year, the economy grew at a brisk 5.6 percent pace, the strongest growth spurt in 21/2 years. But growth slowed to a 2.6 percent pace in the second quarter as consumers and businesses tightened their belts in response to the toll of rising energy prices and the impact of two-plus years of climbing interest rates.