BY Sean Alfano
DAILY NEWS STAFF WRITER
More bad news hit the U.S. economy Friday as the Commerce Department released a revised forecast of economic growth that shows a decline to 1.6%.
The second-quarter numbers were initially forecasted to be 2.4%.
The economy grew at 3.7% rate in the first quarter.
This comes as Wall Street closed below 10,000 Thursday, a first since the beginning of July.
The dismal data has led to fears the country is headed for another recession.
"The economy is going to limp along for the next few months," Gus Faucher, an economist at Moody's Analytics, told The Associated Press. "There's even a one in three chance it could slip back into recession," he said.
The outlook for the third quarter isn't much better with economists expecting just a 1.7% growth.
Also, the private sector is not adding enough jobs to dent the unemployment rate, which remains stuck at 9.5%.
The sagging housing market has also been a drag on economic growth. Earlier this week, new home sales sunk to a record low in July and existing homes sales fell 27%.
Consumer spending in the second quarter grew 2%, from 1.9% in the first quarter.
The somber news comes as Fed Chairman Ben Bernanke will give a key speech to bankers Friday that will be aimed at restoring confidence in the economy.
"While we don't expect the chairman to brace the nation for a 'double dip,' he may warn that near-term growth could be insufficient to promote a sustained reduction in the country's 9.5% unemployment rate," Neal Soss of Credit Suisse Group, told the Wall Street Journal.