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GDP revision points to a faltering recovery

Economic statistics released today offered the clearest sign yet that the recovery is slowing.

The government lowered its estimate of economic growth in the second quarter to an annual rate of 1.6 percent after originally reporting last month that growth in the three-month period was 2.4 percent, the New York Times reports.

The revision of the nation's gross domestic product marks a significant slowdown from the annual rate of 3.7 percent in the first quarter and 5 percent in the last three months of 2009.

The news came at the end of a week that showed the economic retrenchment that began in the second quarter has spilled over into the summer. Home resales in July were down to their lowest level in a decade and sales of new homes that month were at their lowest level since the government began tracking such data in 1963.

Orders for large factory goods, excluding the volatile transportation sector, dropped in July, indicating that recovery in the manufacturing sector also is stalling.

Economists are now concerned that the outlook for job creation, which has been sputtering all summer, could deteriorate further.

"When you get a downshift in growth, there is a risk that it will feed on itself," James F. O'Sullivan, the chief economist at MF Global, told the newspaper. "The question now is to what extent has the improving trend just been temporarily set back or has it really been short-circuited."

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