WASHINGTON—The U.S. economy grew at a rate of about 2% – a downward revision from its initial estimate of 2.1%–during the second quarter, according to the Commerce Department's new estimates.
“GDP growth was revised slightly lower from the initial estimate despite an even stronger reading on consumer spending,” said NAFCU Chief Economist and Vice President of Research Curt Long in a NAFCU Macro Data Flash report.
“With the upward revision to 4.7% annualized growth, consumption during the quarter achieved its fastest pace since 2014,” added Long. “Ordinarily, such a strong performance from the economy's most important segment would result in a higher rate of GDP growth. The fact that overall growth was just 2% speaks to the mounting burden being placed upon consumers at the moment.”
Contributions to growth of real GDP came from gains in consumption spending (+3.1%) and government spending (+0.77%). However, slower inventory accumulation and declines in net exports, nonresidential investment and residential investment reduced growth.
PCE inflation, the Fed's preferred inflation metric, increased from 0.4% in the first quarter to 2.3% in the second quarter. Meanwhile, core PCE inflation – excluding food and energy – increased to 1.7%, Long said.