US economy grew at tepid 1.1 percent pace in spring

“Four percent growth is achievable, but Clinton wants to continue with a third term of Obama’s slow growth policies”.

The economy was undermined by a decline in inventories for the quarter, which subtracted over 1.25% from GDP, the largest negative contribution for two years.

Still, the economy expanded at a lacklustre 1 per cent annual pace in the first half of 2016, following growth of 2.6 per cent previous year.

The initial estimate was 1.2 percent.

Federal Reserve Chair Janet Yellen struck an upbeat note on the economy on Friday when she addressed the annual global central bankers’ gathering in Jackson Hole, Wyoming. Many economists believe the labor market is a better gauge of the economy’s health than gross domestic product, which can be hard to measure.

The level of investment was 0.8 per cent lower than a year earlier.

Consumers are still the biggest drivers of the U.S. economy. Final sales to private USA purchasers increased 3 percent.

Imports, which were a subtraction in the calculation of GDP, increased, it noted.

Inventories shrank by an annualized $12.4 billion in the second quarter, subtracting 1.26 percentage points from GDP, the most in more than two years. GDP measures the economy’s performance from the income side.

United States second-quarter revised GDP data was revised down marginally to 1.1% from the original estimate of 1.2%.

The decision to leave the European Union cast an abrupt shadow over the economy, prompting the Bank of England to cut interest rates this month and piling pressure on new prime minister Theresa May to deliver a tax and spending boost.

The ONS data showed trade dragged on overall economic growth in Britain in the April-June period but there have been signs that the post-referendum slump in the value of the pound is giving exporters some help. It isn’t just because of the Fed, there is a weaker demand for capital at play as well. “For example, the frustratingly slow pace of real wage gains seen during the recent expansion likely partly reflects the slow growth in productivity”.

The change in GDP reflected downward revisions for government spending, private inventories and net exports, partially offset by upward revisions for nonresidential fixed investment and PCE.

Consumer spending, which makes up more than two-thirds of USA economic activity, was revised up to show it increased at a 4.4 percent rate – the fastest since the fourth quarter of 2014. Trade deficits and inventories continue to plague US economic growth, with the latter alone slicing off 1.26% from GDP growth.