Washington (AFP) – The US economy grew more slowly than expected in the second quarter of 2016, rising a modest 1.2 percent, according to an advance estimate released Friday by the Commerce Department.
The department also revised first-quarter growth estimates for gross domestic product downward to 0.8 percent from 1.1 percent, reflecting poorer results in residential investment, private inventories and exports.
The second quarter results were well below analysts’ expectations of 2.6 percent growth and could temper the cautious optimism expressed in advance of this week’s meeting of the US Federal Reserve.
The Fed had left rates untouched but acknowledged a rosier economic picture, leaving open the possibility of rate increases in 2016 should conditions continue to improve.
The results come in the middle of a hotly contested presidential election in which voters’ economic prospects are a key issue.
The small rise in second-quarter growth reflected increases in consumer prices and exports and smaller drops in federal spending and non-residential fixed investment, according to the department.
These gains were offset, however, by smaller spending from state and local governments as well as from home owners and companies.
GDP is the broadest measure of the monetary value of goods and services produced across the economy, including consumer and government spending, private investment and exports.
Disposable personal income rose 3.1 percent to $106.3 billion, faster than the first quarter’s revised estimate of 2.5 percent.
Personal savings were also down nearly 10 percent at $763.1 billion, according to the department.
The Commerce Department estimates are based on incomplete data and are subject to regular revisions.
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