WASHINGTON, Aug 29 — The world’s largest economy grew a little more slowly in the second quarter than previously thought, the government reported today, with new data showing weaker oil exports and local government spending.
GDP expanded in the April-June period by 2.0 per cent, down a notch from the initial 2.1 per cent growth estimate and well below President Donald Trump’s 3 per cent target, according to the Commerce Department.
Recession indicators in recent weeks have begun to flash warning signs, and though the American economy is still outpacing the rest of the industrialised world, it has begun to sputter worryingly in some areas.
Still, corporate profits rose in the second quarter, according to newly available figures, after falling at the start of the year.
While largely confirming economists’ expectations, the second quarter GDP numbers nevertheless marked a sharp slowdown from the heady pace of growth at the start of the year.
While unemployment remains low, hiring has slowed in 2019, and business investment has dropped sharply.
Investors have become increasingly worried a recession in the rest of the world and the Brexit turmoil will spill over into the United States — already stressed by Trump’s grinding trade conflicts with China.
But a solid bump in consumer spending — on health care and retail goods — provided a dose of good news and offset the weaker areas.
The numbers confirmed the growing divide between consumers and big business, which have sharply curtailed investment in new factories as the China trade war has shaken their confidence, disrupting supply chains and raising prices.
While investment in structures was its weakest in more than three years, private consumption of non-durable goods was the strongest since 2003.
Tourism and travel was another sore spot, as falling revenues from foreign visitors helped shave a half percentage point off growth in exports of services, hitting hotels, restaurants and tourist attractions.
Trump has by turns denied that the US economy is weakening or sought to blame the Federal Reserve for failing to cut interest rates fast enough.
A real estate magnate, Trump campaigned on his stewardship of the economy, so signs growth is faltering could potentially jeopardise his chances at winning a second term in next year’s elections.
But economists worry that, with interest rates already very low, the Fed may have little room to manoeuvre should a recession arrive, while a divided Congress and soaring deficits may make fiscal stimulus unlikely at best. — AFP