The growth rate was lowered from a previous estimate of 1.7 per cent, the Commerce Department said Thursday.
About half of the downward revision to growth came from a decline in farm production. The estimate for crop production was slashed by $12 billion. But economic growth was also weaker because of slower growth in consumer spending and exports.
Economists said that U.S. Midwest drought would likely be a drag on growth in the July-September quarter.
But Paul Ashworth, chief economist at Capital Economics, said once the drought eases and crop yields rebound to normal levels, the farm sector will provide a boost to economic growth.
Growth slowed from the 2 per cent rate in the January-March and isn't expected to exceed that level for the rest of the year. Growth at or below 2 per cent is typically too slow to lower unemployment, which was 8.1 per cent in August.
Most economists expect unemployment will stay around 8 per cent for the rest of this year.
A weak economy and high unemployment could hurt President Barack Obama's re-election chances and bolster Republican nominee Mitt Romney's campaign.
The slow growth and anemic job creation prompted the Federal Reserve earlier this month to take some dramatic steps in an effort to jump-start activity.
High unemployment and sluggish growth prompted the Federal Reserve last week to announce several major steps to boost the economy. Chairman Ben Bernanke said the Fed will buy $40 billion of mortgage-backed securities a month until there is "substantial" improvement in the job market.Suggest a correction