Slower increases in consumer spending, business investment cited
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The government chopped its estimate of U.S. growth in the second quarter, as consumers and businesses spent and invested less than initially believed.
In its third and final review of quarterly growth, the Commerce Department on Thursday said gross domestic product in the April-to-June period increased by 1.3% instead of 1.7% as previously reported.
Economists surveyed by MarketWatch had expected GDP to be left unchanged at 1.7%. The economy grew at a 2.0% pace in the first three months of the year.
The main culprits were consumer spending and business investment outside of housing. Consumer spending rose 1.5% in the previous quarter instead of 1.7% as initially forecast. And business investment, excluding residential housing, was revised down to a 3.6% increase from 4.2%.
Slower net export growth was also a contributing factor. The increase in exports was lowered to 5.3% from 6.0%, a larger change compared to imports. Import growth was trimmed to 7.0% from 7.3%
Meanwhile, the government said corporate profits climbed $21.8 billion in the second quarter, compared to a prior estimate of a $10.4 million increase. The final reading of GDP includes more accurate data draw from business and government tax records.
By contrast, corporate profits declined by $53.0 billion in the first quarter.
In a separate report Thursday, Commerce said orders for durable goods sank 13.2% in August. Yet the decline was a much smaller 1.6% after factoring out orders for transportation goods such as jumbo jets, autos and pickup trucks. Read story on durable-goods orders.
The Labor Department, meanwhile, said new applications for jobless benefits dropped 26,000 to 359,000 in the week ended Sept. 22. That’s the lowest level since late July. Read story on jobless claims.
Jeffry Bartash is a reporter for MarketWatch in Washington.
