On Friday, the Commerce Department will provide its first of three estimates of GDP growth for the April-June quarter.
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Economy grew 2.9% y/y in June, making second quarter growth 3.1%, after 2.6% growth in the first quarter of 2016. Economists surveyed by Bloomberg had forecast growth of 2.6%.
Growth for 2012 to 2015 was revised up marginally, to an average 2.2% a year from 2.1%.
The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending.
The weakness come at a murky time for America’s economy.
The new GDP report will likely be used by both Democrats and Republicans to try to score political points. Job growth has slowed down this year after two years of historic gains. Democrats point instead to structural changes in the US economy and to obstructionism by Republican leaders in Congress who have blocked spending initiatives.
Although consumers are spending at a moderate rate, there are no indications that they will be accelerating in the second half. If you would like to discuss another topic, look for a relevant article.
The Federal Reserve indicated on Wednesday it was still on course to raise interest rates this year after “near-term risks”, such as slowing employment, diminished.
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