GDP growth slows to 1.3% in 2Q
Americans continue to limit spending and the economy rose at a rate of 1.3% in the second quarter, according to the first Commerce Department estimate for gross domestic product for the period. Analysts polled by Econoday expected GDP growth of 1.9% for the three months ended June 30 with a range of estimates from 1% to 2.1%. Economists surveyed by Reuters projected growth of 1.8%. The Bureau of Economic Analysis also revised first-quarter GDP growth to a mere 0.4% from 1.9% previously reported. Consumer spending rose at an annualized rate of just 0.1% during the second quarter, the weakest level in two years and down from 2.1% growth for the first quarter. Paul Dales, senior U.S. economist at Capital Economics, said the revision to first-quarter GDP "is really eye-catching." "With a fiscal consolidation on the way, it is hard to see the economy getting much stronger," Dales said. "In fact, if the debt ceiling is not raised by the end of Tuesday, we could well have another recession on our hands." The Commerce Department said rising second-quarter exports, nonresidential fixed investment, private inventory investment, and federal government spending were offset by lower state and local government spending. Meanwhile, imports increased. Write to Jason Philyaw.