The Wall Street Journal is reporting that the US gross domestic product grew at an annual rate of 1.2 percent in the second quarter, below the 2.6 percent forecast by economists. This is the worst first half performance since 2011. The current annual growth rate during this business cycle is 2.1 percent, the weakest of any expansion since 1949, according to the Journal.
Although unemployment has fallen below 5 percent this year and employers are adding jobs, the pace of monthly payroll growth was down, leading Federal Reserve officials to rethink their support of an interest rate increase this year if the economy is not on as solid footing as forecasted.
The second quarter did have some positives: consumer spending rose, personal consumption expand at a 4.2 percent rate, spending on services was up 3 percent, and international trade added .23 percent to overall growth.
Nonresidential fixed investments however declined at a 2.2 percent pace, meaning companies spent less on buildings and equipment. Residential fixed investments regarding home building and improvements also fell at a 6.1 percent pace.
These 2nd quarter numbers have not yet felt the effect of the UK’s brexit decision which will add more uncertainty.