<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Mark Whitehouse</p>&#xD; &#xD; <p>If legislators needed a reminder that now is not the time to be playing games with the U.S. economy, they received it today in the Commerce Department's latest report on growth.</p>&#xD; &#xD; <p>Two years after it hit bottom in mid-2009, the economy has yet to regain the losses it suffered in the recession (see chart), revised data from the Commerce Department show. In inflation-adjusted terms, U.S. output in the second quarter of 2011 was still 0.4 percent below its most recent peak in the fourth quarter of 2007.</p>&#xD; &#xD; <p>The new data show that the economy nearly stagnated in the first quarter of this year, growing at an annualized, inflation-adjusted rate of only 0.4 percent. Excluding the change in inventories -- which showed businesses accumulating stuff at a faster rate -- the economy actually did stagnate. In the second quarter, growth accelerated to only 1.3 percent, well below its potential and not fast enough to make a dent in unemployment.</p>&#xD; &#xD; <p>Given the U.S. economy's weakness, it wouldn&#x2019;t take much of a shock to knock it back into recession. Just ask the Japanese. Back in the 1990s, the government made a big policy mistake, sharply raising taxes at about the same time the Asian financial crisis hit. Result: The Japanese economy dipped back into recession.</p>&#xD; &#xD; <p>U.S. legislators are on the verge of making a similar policy mistake by failing to raise the debt ceiling -- or by passing front-loaded spending cuts -- at a time when Europe's debt problems are still threatening to develop into a full-blown financial crisis. Let&#x2019;s hope the latest data on the economy curb their appetite for self-destruction.</p> </body> </html>