US growth stays at 1.5% as spending, business investment boost

The US economy expanded at an annualized rate of 1.5% in the second quarter, unchanged from the government’s initial estimate, although revised figures showed stronger consumer spending and business investment, Bloomberg reports.

The second estimate released by the Bureau of Economic Analysis showed that inflation-adjusted gross domestic product (GDP) growth slowed from a 2.1% pace in the first quarter.

Consumer spending, which accounts for more than two-thirds of economic activity, rose at an annualized rate of 3.4%, up from the previously estimated 3.2%. Nonresidential fixed investment also increased more strongly than initially reported, advancing at an 8.5% annualized pace.

A key measure of underlying domestic demand, final sales to private domestic purchasers, was revised to a 4.2% annualized increase in the second quarter, marking its strongest performance in more than three years. The initial estimate had put growth at 3.9%.

The measure excludes net exports, inventories and government spending and is closely watched as an indicator of the underlying strength of domestic demand.

Government spending, meanwhile, fell at an annualized rate of 1% in the second quarter, largely reflecting a sharp decline in nondefense-related outlays.

Inflation pressures also appeared somewhat stronger than initially estimated. The personal consumption expenditures (PCE) price index excluding food and energy was revised to an annualized 3.6% increase, from the previously reported 3.4%.

Separate data released on August 26 showed that the core PCE price index rose 0.2% in July from the previous month, providing another indication that underlying inflation remains elevated.

By Vafa Guliyeva