Economic recovery loses steam in second quarter

The economic recovery lost momentum in the second quarter, and in a fresh sign of weakness, new claims for jobless benefits last week climbed to their highest level in nearly two months.

After bolting out of the gate with a brisk 5 percent growth rate in the first quarter, the economy stumbled in the spring, growing at an annual rate of just 1.1 percent.

The Commerce Department's latest reading Thursday on gross domestic product in the April-June quarter was unchanged from its initial estimate a month ago. GDP measures the total value of goods and services produced in the United States.

A second report raised new concerns about the lackluster job market.

For the third week in a row more Americans filed new claims for unemployment insurance. Claims rose by 8,000 last week to a seasonally adjusted 403,000, the Labor Department said. Economists were expecting claims to go down.

Last week's increase pushed claims over the 400,000 mark, a level associated with a weak job market, to their highest point since July 6, when claims hit 407,000. That's also the last time claims climbed over 400,000.

"It's unnerving," said economist Richard Yamarone of Argus Research Corp. "Right now the economy is in desperate need of a labor market revival, and these data don't suggest that is in the cards."

The number of unemployed people continuing to collect jobless benefits jumped by 90,000 to 3.6 million for the week ending Aug. 17, the most recent period for which the information is available. That suggests not a lot of hiring is going on, economists said.

The nation's unemployment rate -- now at 5.9 percent -- could hit 6.3 or 6.5 percent by the fall, economists said.