U.S. economic growth slows below Trump target

US economic growth slows in second quarter as trade disputes take toll

More broadly, most economists weren't concerned by the drop from the first quarter, since much of the strength in the beginning of the year came from businesses binging on buying goods ahead of a potential trade war with China.

"There could be more noticeable effects on various growth components, with weakness in related equipment spending and exports and a partially offsetting increase in inventories", said Daniel Silver, an economist at JPMorgan in NY. A US measure of production has declined in consecutive quarters, the common definition of recession, while a gauge of global factory activity contracted in May and June. This year's revision covers the five years from 2014-2018.

Overall, the changes don't significantly alter the broader trajectory of the economy. Most economists say the tepid pace reflected the severity of the 2007-2009 recession as well as such long-term trends as the retirements of the baby boomers and slowing worker productivity.

Trump boasted widely that he achieved his growth target last year, but he suffered a disappointment Friday when the Commerce Department revised the growth figures down for part of last year, meaning Trump has yet to achieve a full year of 3 percent growth during his tenure.

"We've accomplished an economic turnaround of historic proportions", the president said in a White House press release. The personal savings rate past year was 7.7 per cent - up from a previous estimate of 6.7 per cent - after 7 per cent in 2017, the revised figures show.

Even that was somewhat misleading. But four years ago, under President Barack Obama, the economy expanded 3.4% over the four quarters ending in the second quarter of 2015.

While the monthly reports have been lumpy due to new tariff policies, the data suggested net exports over the past several months were set to weigh on second-quarter economic expansion.

The economy grew 2.9 per cent in 2018 and growth this year is expected to be around 2.5 per cent. Economists estimate the speed at which the economy can grow over a long period without igniting inflation at between 1.7 per cent and 2.0 per cent.

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Measured another way - total output for 2018 compared with total output for 2017 - the economy grew 2.9% past year. This measure is preferred by some institutions and many economists because it is thought to present a clearer picture of what happened in a given year.

Speaking to the business channel CNBC yesterday, White House economic adviser Larry Kudlow said the administration had "ruled out any currency intervention".

For example, the economy grew more slowly than previously reported in the second quarter of 2018, at a 3.5% annual rate rather than 4.2%. Growth in the third quarter was slashed to a 2.9% rate from a 3.4% pace.

Although this report does suggest that the United States economy might expand more slowly in the second half of 2019, some financial institutions believe that this is just a slight bump in the road.

If the actual number comes in line with the expectations, it would signal that the economy has weakened to some extent, especially after a stellar 3.1 percent growth in the first quarter.

Sung Won Sohn, a business economist at Loyola Marymount University in California, noted the disparity between solid USA consumer spending and tepid corporate investment. The "second" estimate for the second quarter, based on more complete data, will be released on August 29, 2019.

The tax cut for businesses was supposed to spur companies to invest in new properties, equipment and products, but after a bounce early previous year, businesses have pulled back on spending.

But the decline was less than expected - thanks to a consumer spending spree - and the report showed signs that there is continuing momentum in the US's decade-long economic expansion, albeit at a slowing pace.

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