Friday, July 29, 2016

GDP Stumbles Again

People hoping for a strong bounceback from the weak GDP numbers we saw in the first quarter were disappointed by the figure released by the Commerce Department this morning. The economy grew at just 1.2 percent in the second quarter.

Corporate spending on equipment, structures and intellectual property fell by 2.2 percent after a 3.4 percent drop in the first quarter. Outlays for equipment dropped for the fourth quarter in the last five. Another problem was a decrease in residential investment, which fell at a 6.1 percent pace.

The good news is, household consumption, which accounts for about 70 percent of the economy, grew at a 4.2 percent annualized rate. That's the biggest jump since the end of 2014, and added 2.8 percentage points to growth.

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