(Bloomberg) – US economic growth slowed in the second quarter by less than expected as consumer spending peaked at estimates, even though weaker investments in business and exports underscored the risks. the Federal Reserve against an interest rate cut next week.
Gross domestic product expanded to 2.1% annual interest rate, according to data from the Department of Commerce Friday which peaked the forecasts for 1
Consumer spending, the bulk of the economy, increased 4.3%, while public spending climbed 5% and offered the biggest increase over a decade. Foreign investment fell 0.6% for the first fall since 2015 and the residential area fell for a sixth period.
The Mixed Report highlights how President Donald Trump – who has repeatedly called for lower interest rates – is looking forward to signs of solid economy while his trade war with China is weighing on the expansion and giving uncertainty to global businesses. Revised data released Friday showed that the economy missed out on Trump's 3% growth target in 2018, after previous data had shown it to be consistent.
Friday's report showed fresh evidence that trade is weighing on the expansion as exports fell 5.2% while imports rose only 0.1%. Total annual growth was reduced to 2.3%, the weakest pace in two years.
The broadest goal report for all goods and services comes when the Fed is expected to cut interest rates next week by a quarter point. The GDP report is unlikely to fluctuate this result, although officials are likely to assess the weakness of trade and corporate investment as a risk to the economic outlook.
Excluding the unstable trade and inventory components of GDP, final sales to domestic buyers increased by 3.5% pace, the best in a year. Economists monitor this measure for a better sense of underlying demand. Inventories were a drag on growth, and pulled 0.86 points from the growth after a contribution of 0.53 points in the previous period.
Fed's preferred underlying inflation measures, the Personal Consumer Expense Price Index excluding food and energy, strengthened at an annual rate of 1.8% in the quarter, closer to the policy's 2% target.
The expansion, which this month was the farthest on record, cools down as the impact of fiscal stimulus in 2018 fades and global growth slows, with the International Monetary Fund again cutting the estimate earlier this week. A stronger dollar and new tariffs also make it less desirable to do business with the United States. reports on a small second quarter. A US manufacturing target has declined in subsequent quarters, the common definition of recession, while a goal of global factory activity contracted in May and June.
A more positive report Thursday showed that business equipment orders jumped in. By June, since the beginning of 2018, the signaling company's investment can regain momentum that will help support the economy in the coming months.
Consumer sentiment is close to historical highlights and robust spending stops growing. Detail sales have progressed for four straight months, the longest line since the beginning of 2018, indicating that Americans benefit from a tight labor market and increased wages. Coffee Chain Starbucks Corp (NASDAQ :). Thursday, US sales of comparable stores said 7% from the previous year.
Trump targets growth of around 3%, although economists see growth in under 2% at least at the end of next year. Revised GDP figures released on Friday show 2.5% growth in the fourth quarter to the fourth quarter last year. This compares with a previous estimate of 3% and an upward revised 2.8% in 2017, the first year of Trump's presidency.
Government spending was boosted from a 15.9% increase in nondefense federal spending, which contributed most to two decades of growth. This was bolstered by delayed compensation for some federal employees following the closure of the government that closed in January.
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