Economy grew at tepid 1.1% pace in spring
WASHINGTON — The U.S. economy expanded at a sluggish 1.1 percent pace this spring as businesses reduced their stockpiles of goods and spent less on new buildings and equipment.
Yet, most analysts forecast much faster growth in the summer and fall, fueled by healthy consumer spending.
Friday’s estimate is below the Commerce Depart- ment’s previous figure of 1.2 percent growth as measured by gross domestic product, the broadest gauge of the economy.
Consumers offset the corporate cutbacks in the April- June quarter by spending at the fastest pace in six quarters, Commerce said Friday. That suggests steady job growth and modest pay gains are making Americans more confident and willing to spend.
“The very slight downward revision isn’t too concerning, especially given that the more recent data point to a strong rebound in the third quarter,” Steve Murphy, an economist at forecasting firm Capital Economics, said in a research note.
The Federal Reserve Bank of Atlanta forecasts growth will jump to a 3.4 percent annual pace in the July-September quarter.
The economy expanded at a lackluster 1 percent annual pace in the first half of 2016, following growth of 2.6 percent last year.
The sluggish first half is a stark reminder of the economy’s inability to achieve strong, sustainable growth since the recession ended seven years ago. It has been the slowest recovery since World War II, and followed the worst downturn since the 1930s.
Growth hasn’t topped 3 percent for a full year since 2005.
The economy stumbled in the first three months of the year as consumers spent cautiously. Slow overseas growth and a stronger dollar held back exports.