August 26, 2016 — 5:30 AM PDT
The U.S. economy grew less than previously reported last quarter on lower government outlays and a bigger depletion of inventories, capping a sluggish first-half performance propped up mainly by consumer spending.
Gross domestic product, the value of all goods and services produced, rose at a 1.1 percent annualized rate, down from an initial estimate of 1.2 percent, Commerce Department figures showed Friday in Washington. Household spending, the biggest part of the economy, was revised higher on used-car sales.
The economy’s failure to develop a sustained pickup has helped keep Federal Reserve policy makers from pulling the trigger on an interest-rate increase so far this year. Economists project a third-quarter rebound driven by household purchases and more stockpiling, and the report showed wages and salaries were revised sharply higher, indicating consumers have the wherewithal to continue spending.
“The only real area of strength was consumer spending,” David Sloan, senior economist at 4cast Inc. in New York, said before the report. At the same time, “the general view is that things are going to pick up in the third quarter.”
Republican presidential nominee Donald Trump has been trying to hammer home to voters the message that the economy can do better. Earlier this month, he blamed President Barack Obama and Democratic nominee Hillary Clinton for policies that produced “the weakest so-called recovery since the Great Depression.”
The revised pace matched the median projection of economists surveyed by Bloomberg. Forecasts ranged from 0.9 percent to 2.8 percent. The economy grew at a 0.8 percent pace from January through March.
The latest estimate of GDP is the second of three for the quarter, with the next release scheduled for late September, after more information becomes available.
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