US Real GDP Growth Slowed Down More Than Expected In The 2Q
The US real GDP growth slowed down more than expected to an annualised rate of 2.4% in the 2Q, compared with consensus forecast of +2.6% and a revised +3.7% in the 1Q. This was the second consecutive quarter of slowing down, suggesting that the US economic recovery is slowing down. The slowdown was due to weaker consumer spending, which eased to 1.6% in the 2Q, from +1.9% in the 1Q, on account of a slowdown in spending on durable- and non-durable goods. This was made worse by a sharp rise in imports, leading to net exports subtracting 2.8 percentage points from GDP growth in the 2Q, larger than a subtraction of 0.3 percentage point in the 1Q. These were, however, mitigated by a pick-up in fixed investment, which strengthened to 19.1% in the 2Q, from +3.3% in the 1Q. Stronger growth was attributed to higher business spending on equipment & software, which picked up to 21.9% in the 2Q, from +20.4% in the 1Q. A turnaround in residential investment, which grew by 27.9% in the 2Q, a rebound from -12.3% also helped. Similarly, government spending rebounded to increase by 4.4% in the 2Q, from -1.6% in the 1Q. These were aided by a build-up in inventory during the quarter. As a whole, despite the moderation, the US economy will likely remain resilient even though growth is likely to slow down in the 2H of the year.
Tracking The World Economy... - 02/08/2010
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