The economy is smaller today than it was before the Great Recession began in 2007, though the country’s labor force and production capacity have grown. The outlook for digging out of that hole is getting weaker by the day, and analysts across Wall Street have already begun slashing their forecasts for output and job growth for the rest of this year. Usually, a sharp recession is followed by a sharp recovery, meaning the recovery growth rate is far faster than the long-term average growth rate; last quarter, though, output grew at less than half of the average rate seen in the 60 years preceding the Great Recession.

Image Credit... The New York Times

Particularly distressing to economists is that consumer spending — which, alongside housing, usually leads the way in a recovery — has been extraordinarily weak in recent quarters. Inflation-adjusted consumer spending in the second quarter barely budged, increasing just 0.1 percent at an annual rate, the Commerce Department report showed.

“People are spending more, but that spending is being absorbed in higher prices, not in buying more stuff,” said John Ryding, chief economist at RDQ Economics.

Even the brightest parts of the latest report were bittersweet. For example, motor vehicle output fell much less than was predicted after the natural disasters in Japan disrupted supply chains. But that means there will probably be a less buoyant bounce in coming months in autos, which economists were counting on to raise growth rates later this year.

Some economists cautioned not to read too much into this figure, though, or any individual quarterly number from the last report. The Commerce Department will probably make substantial revisions to the latest numbers, just as it did on Friday for the data released over the previous decade. Among the more jarring revisions in its latest report was the downgrade for growth in the first quarter of this year, from the original estimate of a 1.9 percent annual growth rate to a rate of just 0.4 percent.

“Sometimes it feels like I’m a physicist who’s been flipped into a different universe trying to explain these revisions, rather than an economist tracking output growth,” said Mr. Ryding. “The economy is clearly performing poorly, though we don’t know quite how poorly because these individual quarterly revisions can sometimes be something of a joke.”

The slow growth rate is largely responsible for stubbornly high joblessness across the country. Businesses are sitting on a lot of cash, but are still reluctant to hire because there is so much uncertainty about the future of the economy and whether they will continue to have a steady flow of customers. As of June, 14 million Americans were actively looking for work, and the average duration of unemployment has been climbing to record highs month after month.