Second quarter numbers show that the economy has slowed to its worst pace since the end of the recession, according to The Associated Press. High gas prices and a lack of income improvements have caused consumers to cut back on spending.
The GDP increased 1.3 percent from the first quarter, according to Bloomberg. The median forecast of economists surveyed by Bloomberg showed a 1.8 percent increase.
Government spending has also fallen for the third straight quarter. State and local governments have also cut spending in seven of the past eight quarters, according to the AP.
Higher prices on necessities have forced the economy’s growth to slow down considerably. The climb in food and energy prices is driving down the spending on non-essential items.
“This is the worst of all worlds for investors, certainly the worst of all worlds for the Fed,” John Silvia, chief economist at Wells Fargo Securities, said to Bloomberg. “A little too much inflation, not enough growth, that is a tough scenario in the U.S.”
According to the news source, another factor in the lower-than-projected growth is the unemployment rate climbing to 9.2 percent in June.