US economic growth clocks in at snail's pace in 2nd quarter. Up to their ears in debt, US buyers can't be counted on to lift economy

The US economy grew at a snail's pace in the first half of 1985 and shows few signs of speeding up in the second half. In practical terms, the slower-growth outlook means federal budget deficits and the unemployment rate will tend to be higher than they would be in a more robust economy, forecasters say.

At the same time, individual incomes likely will grow somewhat less, they explain.

The impact of slower growth on interest rates will depend somewhat on how Federal Reserve policy makers resolved the dilemma they faced at a meeting here yesterday.

Easing credit conditions could stimulate the economy. But at the same time, it could also add an inflationary kick to money-supply growth, which by some measures already exceeds the Fed's recently reset targets. On the other hand, if the Fed tightens credit conditions to gain more control of the money supply, it could plunge the economy into recession.

New economic statistics provided more information for the Fed's deliberations. The government revised Tuesday its estimate of inflation-adjusted economic growth in the April-to-June quarter, boosting the figure slightly to a 2.0 percent seasonally adjusted annual rate. The preliminary estimate had been 1.7 percent. When combined with almost invisible growth of 0.3 percent in the first three months of the year, the revised figures show the economy grew at a 1.1 percent annual rate in the first half of 19 85.

At the moment, most economists still do not expect the sluggish growth to stall and produce a recession in 1986. And inflation remains relatively well controlled. Prices, measured by the GNP fixed weighted price index, rose at a 4.1 percent rate in the second quarter, the government says.

The key cause of the slow growth remains the nation's trade deficit which is expected to hit a record $150 billion this year.

With the dollar still strong despite recent declines, United States consumers' demand for goods is increasingly being met by imported goods, thus depressing production in the US.

Final sales of goods and services rose 5.8 percent in the second quarter, the new government figures show. But imports sopped up enough of that demand so that the production of goods and services made in the US rose only 2.0 percent.

Early figures for the start of the second half provide little reason for renewed optimism. July data on housing starts, auto sales, retail sales, and business inventories, among others, were discouraging.

``The economy is going into the third quarter like a lamb. According to our outlook, it will leave the way it came in,'' says Deborah Johnson, an economist at Prudential-Bache Securities Inc. She expects inflation-adjusted growth of 1.0 percent in the third quarter and 2.3 percent in the fourth.

The economy ``is not going anywhere. It's a flat economy,'' says David Wyss, senior vice-president of Data Resources Inc., a forecasting firm.

One reason forecasters have been lowering their GNP estimates for the second half of 1985 is that financial resources of America's buyers are being pinched.

The government reported Monday that wages and salaries rose 0.1 percent in July after a 0.6 percent increase in June. The increase was the year's lowest for this key determinant of consumer spending plans. Consumer spending accounts for about two-thirds of total demand for goods in the economy.

Meanwhile consumer installment debt as a portion of disposable income hit a record 18.3 percent in June. This reduces the liklihood that the economy could get a boost from consumers going into more debt. ``The consumer is in about as much debt as he can be,'' notes Dorothea Otte of the Georgia State University Forecasting Project. ``I don't think the consumer can carry the economy any more,'' Mr. Wyss adds.

Econmists have been busy lowering their estimates for the rest of the year in the wake of recent economic news.

``The reacceleration of economic growth in the second half of 1985 is likely to be weaker than many expect,'' says Gary Wenglowski, director of economic research for Goldman Sachs & Co.

While the Reagan administration has been predicting a 5-percent growth rate in the second half and the Fed a 4-percent pace, 2 to 3 percent ``seems more likley to us,'' Mr. Wenglowski recently wrote clients.

Forecasters disagree on how the Fed's policy setting committee will cope with the current economic slowdown given the fact that several of its money-growth measures already are above targets the Fed revised just last month.

Mr. Wyss thinks the Fed will ``sit tight for another meeting,'' waiting for more information before shifting policy. Ms. Johnson thinks the Fed will focus on the sluggish economy and ease credit conditions.

Decisions made by the Fed's policy making armare not published for more than a month after a meeting takes place.