CHICAGO – As the economy comes off its summer peak, the whir of activity is less superheated. Housing has slowed and consumers are slaking their desire to pour gasoline into the tank at prices approaching $3.50 a gallon.

Although growth bounded to a rate above 5 ½ percent in the year’s first quarter, analysts are unsure whether the current pace is anywhere near that level. Ho-hum sales at many of the nation’s retailers suggest that Americans are becoming slow to unleash their wallets to load up on frivolous geegaws.

That brings us to Friday’s report of second-quarter gross domestic product. Chicago economist Robert Dederick is looking for it to show expansion at an annual rate of 3 percent – not too hot and not too cold.

“A lot of the air has gone out of the economy’s balloon since the first quarter, as some sectors have throttled back,” said Dederick, of RGD Economics. “The causes are obvious: higher energy costs and rising interest rates.”

On the bright side, he said, joblessness has remained stable.

Fed speaks in 2 weeks

Speaking of the Fed, there are only about two weeks remaining before members of the central bank gather to discuss monetary policy. A majority of analysts expect policymakers to boost interest rates one more time.

That would be the 18th step higher in a campaign that has extended for more than two years, and would raise the short-term lending barometer to 5.5 percent.

Policymakers “need to walk a fine line because the stock market has been held hostage to the Fed. Investors are becoming very, very concerned,” said Chicago investment manager Marshall Front of Front Barnett Associates.

Numerous categories of stocks have fallen over the last three months, he said, adding to the cautious mood.

At this point, according to Front, there are sufficient signs of economic slowing that a pause in the tightening campaign would be justified.

Profit reports mixed

For investors, the drumbeat of second-quarter corporate profits has been decidedly mixed, with roughly half of companies yet to report.

Last week’s worst disappointment came from Dell Inc., which blamed heavy global competition and price-cutting for a downbeat forecast. Major computer-chip makers also came up short of expectations.

Wall Street’s main worry is that consumers may start to pull back on spending. In that case, corporations would need to pick up the slack by stepping up investments in equipment. Otherwise, an economic slowdown may lie ahead.

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