U.S. Economic Growth Falls Well Short Of Estimates In Q2
29 July 2016 - 7:53PM
RTTF2
Growth in U.S. economic activity in the second quarter
accelerated from the first quarter, according to the initial
estimate released by the Commerce Department on Friday, although
the pace of growth came in well below economist estimates.
The report said gross domestic product climbed by 1.2 percent in
the second quarter following a downwardly revised 0.8 percent
increase in the first quarter.
Economists had expected GDP to jump by 2.6 percent compared to
the 1.1 percent growth that had been reported for the previous
quarter.
The second quarter GDP growth partly reflected a positive
contribution from consumer spending, which surged up by 4.2
percent.
A rebound in exports also contributed to the GDP growth, with
exports climbing by 1.4 percent in the second quarter after falling
in the three previous quarters.
However, the growth was partly offset by negative contributions
from private inventory investment, non-residential fixed
investment, residential fixed investment, and state and local
government spending.
The faster growth compared to the first quarter reflected an
acceleration in consumer spending, the upturn in exports, and
smaller decreases in non-residential fixed investment and federal
government spending. "The disappointing 1.2% annualized gain in
second-quarter GDP growth, combined with the downward revisions to
gains in the preceding two quarters, make a September interest rate
hike much less likely," said Paul Ashworth, Chief U.S. Economist at
Capital Economics.
"Over the past 12 months, the economy has expanded by only
1.2%," he added. "What is really worrying is that pace has still
been enough to reduce the unemployment rate further, suggesting
that the economy's potential growth rate could conceivably be close
to zero."
On the inflation front, the Commerce Department said its reading
on core consumer prices, which exclude food and energy prices,
climbed by 1.7 in the second quarter after jumping by 2.1 percent
in the first quarter.
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