- REUTERS/Brian Snyder
- The Bureau of Economic Analysis said Friday gross domestic product, a measure of all the goods and services produced in a country, slowed between April and June.
- Consumer spending at home partially offset weakness caused by global trade disputes that began more than a year ago.
- The economy expanded at a pace just under the Trump administration’s goal of 3% in 2018, but growth was widely expected to slow this year.
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The American economy slowed sharply in the second quarter, but is still expanding at a solid pace. The newly released data reflects consumer spending at home that partially offset weakness caused by sprawling trade disputes that began more than a year ago.
The Commerce Department estimated Friday that gross domestic product, a measure of all the goods and services produced in a country, rose 2.1% between April and June. That marked a decline from the previous quarter’s 3.1% figure. Economists surveyed by Bloomberg had expected an increase of 1.8%.
Consumer spending, which accounts for more than two-thirds of activity in the economy, picked up to a robust pace of 4.4% in the second quarter. Businesses spent less on capital, however, with nonresidential fixed investment falling 0.6%.
Exports plummeted 5.2% after an unexpected jump in the first quarter, while imports rose. Trade figures have been volatile since President Donald Trump ignited tariff wars with several major economies last year.
At the beginning of 2019, GDP growth was far above estimates at 3.2%. But the print was helped by a sharp jump in exports, while underlying data pointed to slower growth. Trade figures have been volatile since President Donald Trump ignited tariff wars with several major economies last year.
“The factors that contributed to a surge in first-quarter growth – namely, a contraction in imports and rising unsold inventories – reflect concerns over future trade policy and slowing demand,” said Cailin Birch, the global economist at The Economist Intelligence Unit. “They point to a moderation in GDP growth later in the year.”
The economy grew at a pace just under the Trump administration’s goal of 3% in 2018, propelled by $1.5 trillion tax-cut legislation passed in 2017 and increased public spending.
A weaker second-quarter reading makes it less likely that GDP will reach White House estimates for the year. The Council of Economic Advisers forecasted a print of more than 3% this year, far above a Federal Reserve forecast of between 2% and 2.2%.
Friday’s reading is preliminary; a second estimate for the second quarter is scheduled to be released August 29.