A customer shops at the Wal-Mart Neighborhood Market in Bentonville, Arkansas June 4, 2015.
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The recovery in US economic growth during the second quarter of the year has missed expectations, at an annualised rate of 2.3%.
The Commerce Department says the economy expanded at just a 2 percent annual rate from 2012 through 2014, down from a previous estimate of 2.3 percent.
The Fed on Wednesday described the economy as expanding “moderately” while upgrading its view of the labour market and saying housing had shown “additional” improvement.
The dollar extended gains against a basket of currencies, while prices for U.S. Treasury debt fell slightly. The government also said GDP in the January-March period grew 0.6 percent instead of shrinking at a 0.2 percent pace.
The US economy revived in the second quarter after a tepid start to the year, boosted by increased consumer spending and exports, official data released Thursday showed. The strengthening labour market also encouraged consumers to loosen their purse strings.
Harsh winter weather and West Coast labor disputes caused a slowdown in activity in the first quarter, and cutbacks in oil exploration and drilling in the wake of plunging crude prices also hurt the economy. For 2016, Zandi is forecasting growth of 3.1 percent, which would be the best since 2005. That’s still well below the 2.4 percent mean for all other quarters. The Bureau of Economic Analysis, which produces the GDP report, has begun an investigation into such discrepancies, and their initial findings are reflected in the new data issued as part of the annual revisions. Nonresidential fixed investment-reflecting spending on software, research and development, equipment and structures-retreated at a 0.6 per cent rate, compared with a 1.6 per cent growth rate in the first quarter.
Business spending, another key driver of the economy, remained soft in the second quarter and actually dragged down the overall GDP number for the first time since the third quarter of 2012. That decline followed a 44.5 percent plunge in the first quarter and was the biggest fall in that sector since the spring of 1986. The government’s analysts found that figures on federal defense outlays, consumer spending on services and corporate profits showed a few seasonal biases.
Schlumberger said last week it believed the North American rig count may be bottoming and that a slow rise in both land drilling and completion activity could occur in the second half of the year. That left a smaller trade deficit that added 0.13 percentage point to GDP growth.
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Two normally large swing factors, trade and inventories, were fairly stable last quarter and had little influence on growth. Businesses accumulated $110.0 billion worth of merchandise, down from $112.8 billion (72.25 billion pounds) in the first quarter, good news for the remainder of the year. The price index for personal consumption expenditures-the Fed’s preferred measure for inflation-rose at a 2.2 per cent pace in the second quarter.
