US economy grew slower than estimated at 1.1%

news
29 August 2016

The US economy grew at a slower pace than previously reported last quarter on lower government outlays and a bigger depletion of inventories, ending a first-half performance supported mainly by consumer spending.

Gross domestic product (GDP), the value of all goods and services produced, was up at a 1.1 per cent annualised rate, down from an initial estimate of 1.2 per cent, commerce department figures showed Friday in Washington.

Household spending, the biggest part of the economy, was revised higher on sales of used-cars.

With the failure of the economy to deliver a steady pickup the Federal Reserve policy makers opted not to hike interest-rate so far this year.

Economists are looking at a third-quarter rebound driven by household purchases and more stockpiling, and as per the report, wages and salaries had been revised sharply higher, indicating consumers had the means to sustain spending.

''The only real area of strength was consumer spending,''

David Sloan, senior economist at 4cast Inc. in New York, said before the report, Bloomberg.com reported. At the same time, ''the general view is that things are going to pick up in the third quarter.''

Meanwhile, Republican presidential nominee Donald Trump has been trying to impress on the voters that the economy could do better. Earlier this month, he blamed president Barack Obama and Democratic nominee Hillary Clinton for policies that produced ''the weakest so-called recovery since the Great Depression.''

The GDP revision was in line with economists' expectations, and reflected more imports than previously estimated as also weak spending by state and local governments. The economy posted a 0.8 per cent growth in the first quarter and it grew 1.0 per cent in the first half of 2016.

According to commentators, the economy had struggled to regain momentum since output started slowing in the last six months of 2015, which put it in danger of stalling.





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