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Better Economic Growth Likely To Follow Weak Q2

By CHRISTOPHER S. RUGABER

WASHINGTON (AP) â¿¿ A report Wednesday is expected to show the U.S. economy barely grew from April through June. But economists are hopeful that the weak second quarter is a temporary lull that gives way to stronger growth in the second half of the year.

Higher tax increases and steep government spending cuts probably did their worst damage to the economy in the second quarter. As their impact fades, solid job gains, more business spending and a steady recovery in housing should help accelerate growth.

Economists forecast that growth slowed in the April-June quarter to a seasonally adjusted annual rate of just 1 percent, according to a survey by FactSet. That's below the sluggish pace of 1.8 percent in the January-March quarter.

The Commerce Department will release the first estimate of gross domestic product, or GDP, for the second quarter at 8:30 a.m. EDT Wednesday. GDP is the broadest measure of the output of goods and services, including everything from manicures to industrial machinery.

Most economists say growth is already starting to pick up. And many are predicting annual growth rates of between 2 percent and 3 percent in the third and fourth quarters.

There are threats to the better outlook. Unemployment is still high at 7.6 percent, limiting consumer spending. And budget fights in Washington could lead to a government shutdown this fall, potentially disrupting the economy.

Still, recent data have been encouraging.

"More and more of the economic tea leaves are pointing in the same direction: toward a growth revival ahead," Scott Anderson, chief economist at the Bank of the West, said.

Home construction, sales and prices have been growing since early last year. Americans purchased newly built homes in June at the fastest pace in five years. That's raised builder confidence to a seven-year high, which should lead to increases in construction and more jobs.

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