WASHINGTON (AP) _ The U.S. economy grew at a substantially slower annual rate of 1.8 percent in the second quarter, reflecting the drag from a bloated trade deficit.

The Commerce Department reported today that the increase in the gross domestic product _ the total output of goods and services _ from April through June was slower than the 2.3 percent the government had estimated one month ago.

The second-quarter slowdown came after the economy surprised many analysts by growing at a brisk annual rate of 4.3 percent in the first three months of 1999.

On Tuesday, the Federal Reserve nudged up interest rates for the second time this summer in an effort to cool the economy and keep inflation at bay. The Fed also signaled that additional rate increases this year may not be needed unless the economy shows signs of overheating or inflation dangers.

Even though the economy has slowed in recent months, it is still expected to grow almost 4 percent this year, a robust pace.