NEW: US economic growth slowed less than expected in the 2nd quarter, as a surge in consumer spending blunted some of the drag from declining exports.
Economic growth slowed less than expected in the second quarter as a surge in consumer spending blunted some of the drag from declining exports.
But the signs of robust consumer spending, together with a strong labor market, further diminish expectations of a 50 basis point rate cut and could raise doubts about further monetary policy easing this year. The economy is slowing largely as the stimulus from the White House's $1.5 trillion tax cut package fades. The tax cuts together with more government spending and deregulation were part of measures adopted by the Trump administration to boost annual economic growth to 3.0% on a sustained basis.
The government also published revisions to GDP data from 2014 through 2018. The updated data showed growth in the second and third quarters of last year was not as robust as previously estimated, and the economy grew much more slowly in the fourth quarter than had been reported in March. Revised price data showed moderate inflation last year.
The jump in consumer spending helped to offset some of the weakness from exports, which fell at a 5.2 percent rate last quarter, in a reversal of the strong growth experienced in the first quarter. Inventory investment increased at a $71.7 billion rate, slowing from the first quarter's $116.0 billion pace of increase. While inventories cut 0.86 percentage point from GDP growth in the second quarter, the smaller pace of stock accumulation is a potential boost to manufacturing.
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