The US economy grew far less than forecast in the second quarter even though there was a surge in consumer spending.
ADVERTISEMENTThe second quarter of the year brought some rather weak economic growth statistics from the United States.
Between April and June, gross domestic product was up by 1.2 percent from the same period last year, less than half what economists were expecting.
The bright spot was a surge in consumer spending. It increased at a 4.2 percent rate which implies underlying strength in the economy.
Consumer spending accounts for more than two-thirds of US economic activity
But US government spending was down, while businesses invested less and at the same time they are still carrying a lot of inventory.
Business spending has been hurt by lower oil prices, which have squeezed profits in the energy sector.
Economists say uncertainty over global demand and the upcoming US presidential election are also making companies cautious about spending.
The numbers will be a disappointment to policy makers at the central bank, the Federal Reserve, who are looking for sustained improvement before they can raise interest rates.
The economy grew at a 1.2 % pace in Q2 as consumers opened their wallets wider. https://t.co/wz8WpDvswH. pic.twitter.com/wAAHBS49Zn
— BEA News (@BEA_News) July 29, 2016
