US economic growth slows in second quarter, but domestic demand robust

By Lucia Mutikani

WASHINGTON, July 30 (Reuters) - U.S. economical maturation slowed successful the 2nd 4th amid a widening successful the commercialized deficit, but an acceleration successful user spending and robust concern business successful instrumentality related ‌to the buildout of artificial quality infrastructure pointed to underlying strength.

Gross home merchandise accrued astatine a 1.5% ‌annualized complaint past quarter, the Commerce Department's Bureau of Economic Analysis said successful its beforehand estimation of second-quarter GDP connected Thursday. Economists polled by Reuters ​had forecast GDP rising astatine a 2.1% pace. Estimates ranged from a 0.8% complaint to a 2.9% pace.

The survey was, however, conducted earlier the merchandise of June's beforehand economical indicators report, which showed a mean contraction successful the goods commercialized shortage and retail inventories unchanged. That information prompted immoderate economists to chopped their GDP estimates by arsenic overmuch arsenic 0.8 percent constituent to ‌as debased arsenic a 1.5% rate. The ⁠economy grew astatine a 2.1% gait successful the archetypal quarter.

Consumer spending, which accounts for much than two-thirds of U.S. economical activity, surged astatine a 3.2% complaint past 4th aft abruptly slowing ⁠to a 0.5% maturation gait successful the January-March quarter. Despite the Middle East conflict, spending has remained resilient, successful portion acknowledgment to bigger taxation refunds this year, which provided a cushion for consumers against higher gasoline prices stemming from the war.

In summation to generous taxation ​refunds ​from President Donald Trump's "One Big Beautiful Bill," higher-income households who are ​benefiting from beardown maturation successful plus prices are ‌also driving spending. The precocious ended FIFA World Cup tourney besides apt helped to spur spending arsenic did midterm election-related spending by nonprofits.

The AI concern boom, which is showing nary signs of slowing contempt capitalist concerns that valuations of galore exertion companies person go stretched, is besides helping to prop up home demand. But economists warned that the U.S.-led warfare with Iran, present successful its sixth month, posed a downside hazard to request and yet economical maturation successful the 2nd fractional of ‌the year.

The Federal Reserve connected Wednesday near its benchmark overnight involvement complaint ​in a 3.50%-3.75% range. Three members of the U.S. cardinal bank's ​policy-setting committee dissented. They "preferred" a quarter-percentage-point hike.

The Fed described ​economic enactment arsenic "expanding astatine a coagulated gait contempt elevated uncertainty that owes, successful part, to the ‌conflict successful the Middle East." Economists expected the Fed ​to rise involvement rates arsenic soon ​as September to quell inflation, which besides factored into their expectations for slower economical maturation successful the 2nd half.