The Wall Street Journal writes that the U.S. economy slowed in the second quarter of this year and the government said the recession was deeper than earlier believed, adding to concerns over the recovery’s strength.  The Commerce Department Friday said U.S. gross domestic product, or the value of all goods and services produced, rose at an annualized seasonally adjusted rate of 2.4% in April to June. In its first estimate of the economy’s benchmark indicator, the government report showed growth was lifted by business investments and exports. Consumer spending, a key growth engine for the U.S. economy, made a smaller contribution to growth.

Economists polled by Dow Jones Newswires were expecting GDP to rise by 2.5% in the second quarter. In the first quarter, the economy grew by 3.7%, revised up from an originally reported 2.7% increase. But growth estimates all the way back to the start of 2007 were revised lower.

After suffering its worst downturn since the 1930s, the U.S. economy began taking small steps forward about a year ago, helped by the Federal Reserve’s slashing of lending rates and the government tax cuts. But recent data have raised questions about the recovery’s durability. The job market remains weak, with almost one in 10 Americans unemployed, and growth in consumer spending and manufacturing appears to be slowing down.  The government revision of data over the past three years showed that the economy’s exit from its deep slump was weaker than previously estimated. In the final quarter of 2009, for example, GDP rose at an annualized rate of 5.0% as consumer spending didn’t grow as much as previously thought. The earlier estimate was that GDP increased by 5.6%.

In the most recent quarter available, consumer spending rose by a moderate annualized rate of 1.6% in April to June. Spending by Americans, which accounts for more than two-thirds of the economy, rose by 1.9% in the first three months of the year.  Meantime, business spending on equipment and software continued to surge, increasing by 21.9% in the second quarter, compared with a 20.4% rise in the first three months. The figures highlight the contrast in the economy between high company profits and a persistently feeble jobs market keeping consumers at bay.

Federal Reserve Chairman Ben Bernanke, who last week said the economy’s outlook was “unusually uncertain”, has stressed the strength of the recovery will depend on whether consumers spend and companies invest enough to make up for fading support from the government. With unemployment still at 9.5% and Americans worried that taxes will need to rise to cut a huge budget deficit, that remains in doubt. When they meet Aug. 10, Fed officials are widely expected to repeat they see interest rates staying close to zero for a while and are likely to at least discuss ways in which they could support the economy further. A Fed official Thursday warned that deflation is a growing risk for the economy.

Economic growth in the U.S. during the second quarter slowed to 2.4%, indicating that the recovery has been weaker than previously expected. David Wessel, Dennis Berman and Evan Newmark discuss. Also, Dennis Berman tells the story about one of the leaders at Tiananmen Square who is now one of the top candidates to manage Berkshire Hathaway’s investment portfolio.

In a sign of the economy’s weakness, Friday’s report showed price increases continued to move down in the second quarter from already low levels.

The underlying inflation rate — which excludes volatile moves in food and energy prices and is closely watched by the Fed — increased by 1.1% in the April-to-June period from the previous quarter. That was the lowest reading of the core personal consumption expenditure index since the first three months of 2009 and came after a 1.2% rise in the first quarter of this year.

Other inflation gauges within the government’s report were also muted. The overall price index for personal consumption expenditures rose by only 0.1% in the second quarter, slowing sharply from a 2.1% gain in the first quarter. Gross domestic purchase prices rose just 0.1%, after a 2.1% increase in the first quarter. The chain-weighted GDP price index increased by 1.8%, compared to 1.0% in the first three months.

For all of 2009, the government said the U.S. economy contracted by 2.6%, compared to the previously estimated 2.4% decline. In the whole of 2008, GDP was flat, instead of rising 0.4% as previously estimated. In 2007, the world’s largest economy expanded by 2.1%, down from an originally reported 1.9% increase.

In Otsuka v. Polo Ralph Lauren Corp., a federal district court in Northern California recently approved a $4 million class action settlement for unpaid wages. Plaintiffs alleged that, as part of the retailer’s loss prevention program, they were required to submit to inspections of their personal bags and belongings before exiting the store. However, the inspections occurred after the employees had already clocked out. The settlement will compensate as many as 6,700 class members for the off-the-clock time waiting for and submitting to these bag inspections.    Employers are cautioned against retaining control over employees after the employee has clocked out.  Retaining sufficient control over what the employee does after clocking out, may amount to nothing short of forcing the employee to work off the clock, thereby entitling the employees to back pay, penalties and attorneys fees.

The U.S. Department of Labor (“DOL”) has published an Administrator’s Interpretation to address the question of whether an employee is entitled to leave under the Family Medical Leave Act (“FMLA”) to care for a child they are not biologically related to.  The FMLA provides that an eligible employee can take up to 12 weeks of unpaid leave for, among other things, the birth and care of the employee’s own newborn child, for placement of a son or daughter with the employee for adoption or foster care, and to care for a son or daughter with a serious health condition.  Under the FMLA, employees who have no biological or legal relationship with a child may still be considered to stand in “loco parentis” to the child and be entitled to leave to care for the child.  Such a relationship can be demonstrated either by providing day-to-day care for the child, or financial support to the child. The DOL memo also makes it clear that same sex partners can establish the requisite in loco parentis relationship, providing in part that “where an employee provides day-to-day care for his or her unmarried partner’s child (with whom there is no legal or biological relationship) but does not financially support the child, the employee could be considered to stand in loco parentis to the child and therefore be entitled to FMLA leave to care for the child if the child had a serious health condition.”  The Interpretation further states that the same applies for “an employee who will share equally in the raising of a child with the child’s biological parent” and “an employee who will share equally in the raising of an adopted child with a same sex partner, [but] does not have a legal relationship with the child.”  The DOL also notes that “the fact that a child has a biological parent in the home, or has both a mother and a father, does not prevent a finding that the child is the ’son or daughter’ of an employee who lacks a biological or legal relationship with the child for purposes of taking FMLA leave.”

Employers need to be aware that the FMLA and California child care leave laws are not  necessarily limited to traditional definitions of family and parentage.  When faced with a request for child care leave, employers need to make an individualized fact-based determination regarding the relationship between the employee and the child.