US GDP up 2.1% in second-quarter, vs 2% growth expected
GDP increased 2.1%, down from 3.1% from the first quarter, the weakest increase since the first quarter of 2017 as President Donald Trump took office. Dow Jones estimates were for 2% growth.
The report comes amid growing concern that the weakening growth hitting much of the world's economy is spilling over into the U.S. While consumer activity has been strong, manufacturing growth has slumped recently and housing remains a weak spot. Federal Reserve policymakers have been expressing concern about a potential slowdown and are expected to approve a quarter percentage point rate cut at their policy meeting next week. The Fed currently targets its benchmark funds rate in a range between 2.25% and 2.5%, but markets are pricing in a 100% chance of a cut and about a 56% probability of two more reductions before the end of the year, according to the CME.
While central bankers worry over rates, corporate profits have proven more resilient than expected, and analysts believe the economy, though slowing, remains strong enough to support earnings. Also, Goldman Sachs said in a report earlier this week that recent economic data is showing improvement, and the bank's strategists expect GDP to rebound to around 2% in the second half.
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