GDP Slows in Second Quarter

July 26, 2019

 Economic growth slowed in the second quarter of the year, but not by as much as some had feared. Total GDP increased 2.1 percent between April and June, down from 3.1 percent growth in the first quarter. Wall Street economists had been forecasting 2 percent growth.

Growth was bolstered by strong consumer and government spending. Personal consumption—one of the weaker components in Q1—increased by 4.3 percent, the best performance since 2017. Government expenditures and investments increased by 5 percent, the biggest increase since 2009.

However, growth was hindered by business investment and continued weakness in the housing market. Private domestic investment fell 5.5 percent, and spending on construction fell 10.6 percent. Concerns about the trade tensions between the U.S. and China have resulted in lower business sentiment and increased construction costs.

A GDP that is slowing, but not as much as expected, complicates predictions regarding the Fed’s decision surrounding a rate cut. It is widely expected that they will implement a cut at their coming meeting, but likely a smaller cut than some have been expecting.

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