"The consumer environment remains very tough," Michael Polk, chief executive officer of Atlanta-based Newell Rubbermaid Inc., said on a conference call with analysts on July 29. He said a "difficult" U.S. economy was among the reasons the maker of Rubbermaid containers and Sharpie pens had cut its full-year profit and sales forecasts.

Hiring Slows

Hiring has slowed as employers lost confidence in the recovery. Average monthly payroll gains fell to 72,000 in the three months through July, from 215,000 in the prior three months. The jobless rate fell to 9.1 percent in July from 9.2 percent in June as Americans gave up looking for work.

"When we have the kind of combination of sub-par growth, stubbornly high unemployment and a big debt overhang, you need low interest rates," Carmen Reinhart, a senior fellow at the Peterson Institute for International Economics in Washington, said on Aug. 5.

The housing market has also been a drag on growth as sliding home prices cut into consumer confidence and wealth.

Sales of existing homes, the largest portion of the housing market, totaled 4.77 million on an annualized basis in June, a 34 percent drop from their pre-recession peak in September 2005.

The S&P/Case-Shiller index of property values in 20 cities declined 4.5 percent in May from a year earlier, the most in 18 months, and homeownership at 65.9 percent is at its lowest point since 1998, even as affordability is close to a record high.

'Bouncing Along'

"We're still in a market that is clearly bouncing along the bottom on housing and new construction," Christopher M. Connor, chief executive officer of Sherwin-Williams Co., said on a July 21 conference call. The Cleveland-based company, the largest U.S. paint maker, also cut its full-year profit forecast because of rising raw material costs.

Manufacturing, which had been one of the few bright spots in the economy, grew in July at its slowest pace in two years, the Institute for Supply Management said on Aug. 1.

The recovery is sputtering just as the existing fiscal stimulus programs expire and the federal government moves toward reducing budget deficits.

The debt deal signed by President Barack Obama on Aug. 2 would cut $2.4 trillion or more off budget deficits over 10 years.