U.S. economy slowed to 1.5% growth rate in Q2; June core inflation at 3.3%
Gross domestic product, a broad measure of goods and services, increased just 1.5% for the April-through June period, according to Bureau of Labor...
Key points
- Gross domestic product, a broad measure of goods and services, increased just 1.5% for the April-through June period, according to Bureau of Labor Statistics numbers adjusted for seasonality and inflation.
- A separate report showed that the personal consumption expenditures price index, which is the Federal Reserve's primary forecasting gauge, fell a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 3.7%.
- While the Fed technically uses the headline PCE number as its gauge for setting policy, most officials consider core inflation as a better indicator of longer-run trends.
- GDP: Better than the headline While the GDP number was below expectations, the miss appeared to come from a decline in federal government spending and inventories.
What happened
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Gross domestic product, a broad measure of goods and services, increased just 1.5% for the April-through June period, according to Bureau of Labor Statistics numbers adjusted for seasonality and inflation. A separate report showed that the personal consumption expenditures price index, which is the Federal Reserve's primary forecasting gauge, fell a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 3.7%. While the Fed technically uses the headline PCE number as its gauge for setting policy, most officials consider core inflation as a better indicator of longer-run trends. GDP: Better than the headline While the GDP number was below expectations, the miss appeared to come from a decline in federal government spending and inventories. Key areas of the economy continued to show improvement: Personal spending rose 2.1% after eking out a 0.4% gain in the first quarter, while a key indicator of underlying demand called final sales to private domestic purchasers posted a robust 3.9% increase. Spending held up for the month, with personal expenditures rising 0.3%, in line with expectations.