Barack Obama warned that America's prized triple-A rating is in jeopardy and that the country is "almost out of time" to agree a deficit deal as GDP data showed the moribund state of the US economy.
Fears that a recovery in the world's biggest economy is running out of steam were heightened as official figures showed GDP in the US rising 1.3pc in the second quarter, against expectations of a 1.8pc rise. In a chastening statement the Commerce Department also downgraded first-quarter growth from an initial estimate of 1.9pc to just 0.4pc.
Mr Obama said the poor pace of growth further raised the pressure on Democrat and Republican politicians to come to a consensus over raising the $14.3 trillion (£8.7 trillion) deficit ceiling.
"The power to solve this is in our hands on a day when we've been reminded how fragile the economy already is," he said. "If we do not come to an agreement, we could lose our country's triple-A credit rating... because we did not have a triple-A political system to match."
The extent of the uncertainty hanging over the US economy was underlined as the head of the World Bank warned that politicians were courting "calamity" by not coming to an agreement ahead of a deadline on Tuesday next week. "To be blunt, to have a debt default in the United States would not only be a financial calamity but should be an embarrassment for every American," said Robert Zoellick.
The Commerce Department also said household spending had risen at an annual rate of just 0.1pc in the second quarter, prompting fears that high unemployment and a lack of wage growth could mean any resurgence in consumer spending is unlikely to materialise at all in 2011.
Fears that a recovery in the world's biggest economy is running out of steam were heightened as official figures showed GDP in the US rising 1.3pc in the second quarter, against expectations of a 1.8pc rise. In a chastening statement the Commerce Department also downgraded first-quarter growth from an initial estimate of 1.9pc to just 0.4pc.
Mr Obama said the poor pace of growth further raised the pressure on Democrat and Republican politicians to come to a consensus over raising the $14.3 trillion (£8.7 trillion) deficit ceiling.
"The power to solve this is in our hands on a day when we've been reminded how fragile the economy already is," he said. "If we do not come to an agreement, we could lose our country's triple-A credit rating... because we did not have a triple-A political system to match."
The extent of the uncertainty hanging over the US economy was underlined as the head of the World Bank warned that politicians were courting "calamity" by not coming to an agreement ahead of a deadline on Tuesday next week. "To be blunt, to have a debt default in the United States would not only be a financial calamity but should be an embarrassment for every American," said Robert Zoellick.
The Commerce Department also said household spending had risen at an annual rate of just 0.1pc in the second quarter, prompting fears that high unemployment and a lack of wage growth could mean any resurgence in consumer spending is unlikely to materialise at all in 2011.
