White House: Europe crisis "stunted" U..S., world growth

WASHINGTON (Reuters) - The White House blamed the second quarter slowdown in U.S. economic growth reported on Friday on "headwinds," including the debt crisis in Europe.

Gross domestic product expanded at a 2.4 percent rate, the Commerce Department said in its first estimate on Friday, after an upwardly revised 3.7 growth pace in the January-March quarter, as companies invested heavily in imported equipment and the pace of consumer spending eased.

"There is no doubt that we have hit headwinds," Gibbs told reporters traveling on Air Force One with President Barack Obama as he traveled to Michigan to tout his bailout of the U.S. auto industry.

"What happened in Europe, what happened in Greece in the late spring, was a big part of that headwind," Gibbs said.

"The United States made some tough decisions to stabilize our financial system and to inject some recovery into the economy," Gibbs said. "And Europe didn't do, quite frankly, as much. And that has no doubt stunted our growth and stunted world growth."

In Brussels, a European Commission official declined specific comment on Gibbs' remarks.

"Comparing the U.S. and EU economies is ... very difficult, given the different chronology and effects of the crisis," the official said.

Europe has taken steps to deal with the crisis "and the signs are that this is working," he said.

The European Union has embarked on a program of fiscal consolidation and modernization of budgetary and economic surveillance, stress-tested 91 banks and started to deliver on its Europe 2020 strategy for growth and jobs, he said.

The GDP figures released on Friday raised concerns about economic recovery in the rest of 2010.

The U.S. economy is digging out of its longest and deepest recession since the 1930s. It has now grown for four straight quarters, but growth has been too tepid to make much of an impact on the high 9.5 percent unemployment rate.

The lackluster economy and joblessness are eroding Obama's popularity and dimming his fellow Democrats' prospects of keeping their majorities in Congress in November's elections.

(Additional reporting by Luke Baker in Brussels; Editing by Xavier Briand)