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The U.S. economic recovery has been held back this year by tax hikes, federal spending cuts and weaker global growth. The economy expanded at just a 1.7 percent annual rate in the April-June quarter. Most economists expect that figure will revised up to a 2.2 percent annual rate, mostly because of a jump in June exports. The government issues its second estimate for second-quarter growth on Thursday. Most analysts predict growth may pick up to about a 2.5 percent annual rate in the second half of the year. Still, recent data suggest the July-September quarter is off to a weak start, leading some economists to trim their third-quarter forecasts. On Monday the government said orders for long-lasting U.S. factory goods fell sharply in July, in part because businesses cut back sharply on big purchases that signal investment plans. And U.S. sales of newly built homes dropped 13.4 percent last month to a seasonally adjusted annual rate of 394,000. That's the lowest level in nine months, raising worries that higher mortgage rates could slow the housing recovery. Mortgage rates have risen sharply since May when Chairman Ben Bernanke first signaled the Federal Reserve could reduce its bond purchases later this year, if the economy strengthens. The bond purchases have kept long-term interest rates low, making home-buying, auto loans and other consumer loans cheap.
[Associated
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