GDP slows to 2.1% in second quarter - but beats expectations thanks to strong consumer spending
Growth decelerated in the second quarter, but not by as much as Wall Street thought, as tariffs and a global slowdown weighed on the U.S. economy, the Commerce Department reported Friday.
GDP increased 2.1%, down from the first quarter’s 3.1% and the weakest increase since Q1 of 2017 when President Donald Trump took office. GDP grew 2.3% from the same time last year, and 2.5% so far this year.
Dow Jones Q2 estimates were for 2% growth.
However, the underlying numbers in the report seemed to take steam out of the recession fears that have been much of the talk among economists and policymakers at the Federal Reserve.
Personal and business spending grew at a 4.3% annual rate - led by durable goods, which surged at a 12.9% rate after two weak quarters.
Fixed private investment (construction, machinery and software) slid 0.8%, led by a 10.6% fall in non-residential construction. Residential construction slid 1.5% - the sixth-straight quarterly decline in homebuilder activity.
A 38.2% slowdown in inventory accumulation resulted in a 5.5% drop in total private investment.
Real exports fell 5.2%, largely the result of sharply lower shipments to China amid the most serious trade dispute with the Asian giant since the post-war upheaval years.
Government grew at a 5% clip, led by a 15.9% jump in non-defense federal purchases.
At: https://www.cnbc.com/2019/07/26/us-gdp-second-quarter-2019.html
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A 15.9% annualized jump in motor vehicle and parts sales (after a 10.2% drop in the first quarter) helped propel private consumption by 4.3%.
But declines of 5.5% in private investment and 5.2% in exports resulted in an anemic 2.1% GDP reading for the quarter, the slowest in two years.
