US economy grows more than expected but Europe sinks deeper into the mire

ECB president: Mario Draghi is focusing on shoring up the ailing euro

ECB president: Mario Draghi is focusing on shoring up the ailing euro

The US economy grew by more than expected over the spring but Europe sank deeper into the mire.

US gross domestic product rose at an annual rate of 1.7 per cent in the second quarter – slightly better than the 1.5 per cent initially reported and equivalent to around 0.4 per cent growth on a quarterly basis.

But it was still slower than the 2 per cent annual growth rate racked up in the first three months of the year and analysts said the US Federal Reserve may still be tempted to launch a fresh round of stimulus for the economy.

‘The bottom line is that at best the economy remains stuck in second gear,’ said Jim Baird, chief investment strategist for Plante Moran Financial Advisors in Michigan.

Fed chairman Ben Bernanke is expected to offer more clarity on the outlook in the US at the Jackson Hole meeting of central bankers at the end of the week.


Mario Draghi, president of the European Central Bank, has called off his trip to the conference as he focuses on efforts to shore up the crumbling euro.

Pressure is mounting on the ECB to launch a fresh round of bond buying to cap borrowing costs in troubled countries such as Italy and Spain – but there remains stiff opposition in Germany.

At a meeting in Berlin, German chancellor Angela Merkel and Italian Prime Minister Mario Monti clashed over how to tackle the crisis.

Figures in Denmark, which is outside the eurozone, showed its economy shrank by 0.5 per cent in the second quarter of the year – leaving the country on the brink of recession.

Jacob Graven, an analyst at Sydbank said: ‘The debt crisis in the eurozone is the main reason for weak growth in the Danish economy.’