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US economy grows 1.2% in Q2

by ChemOrbis Editorial Team -
  • 29/07/2016 (18:02)
According to data released by the US Commerce Department, the country’s economy expanded by 1.2% on an annual rate in the second quarter after posting a downwardly revised growth rate of 0.8% in the first quarter. The Q2 growth rate represented a smaller expansion than expected as lower inventory investments weighed down on the economy in the second quarter. Economists’ expectations for the quarter had called for a growth rate of 2.6%.

Inventor investments fell for the first time since the third quarter of 2011, declining by $8.1 billion in the second quarter compared with a $40.7 billion increase in the first quarter. Excluding inventories, the US economy grew 2.4%

However, stronger consumer spending backed up the US economy in the April-June period. Consumer spending rose 4.2%, representing the fastest growth pace since the fourth quarter of 2014.

The data also showed that domestic demand grew by 2.7% while business fell at a slower pace of 3.5% following a decrease of 9.5% in the first quarter due to lower oil prices. According to some economists, lower crude oil prices forced some companies to cut capital spending budgets and companies prefer to take a cautious stance due to uncertainty over global demand and the upcoming U.S. presidential election.

On July 27, the Federal Reserve (Fed) According to media reports, the US Federal Reserve (Fed) kept its main interest rates stable for another month, adding that near-term risks on economic growth have diminished with an improving labor market and higher household spending and retail sales.
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