GDP Data Shows Consumers Culling Spending
NEW YORK ( TheStreet) -- A slowdown in consumer spending was among the more troubling aspects of Friday's disappointing read on second quarter GDP growth.
According to the Commerce Department, second-quarter GDP grew 1.3%, falling short of the 1.6% consensus estimate and the 2.1% reading expected by Briefing.com.
Coupled with first quarter GDP growth of 0.4%, the latest numbers confirm economists' belief that the economic recovery slowed significantly in the first half of the year. The government had originally estimated that first quarter GDP grew at 1.9%, but slashed that estimate to 0.4% on new inflation data.
The second quarter increase in real GDP was due to gains in exports, federal government spending, and private investments. A drop in personal consumption, however, proved a serious drag on the overall number.Growth in personal consumption, adjusted for inflation, tapered off to a meager 0.1% in the second quarter from 2.1% in the first quarter. That puts second quarter consumer spending at a two-year low and it's likely to make the Federal Reserve a bit nervous. The private sector, as opposed to the government, is important in determining how the economic recovery will ultimately shape up, according to Drew Matus, an economist at UBS. If Americans aren't spending as much, then they're likely still worried about jobs, inflation and the overall economic picture.
>To contact the writer of this article, click here: Chao Deng. >To follow the writer on Twitter, go to Chao Deng. >To submit a news tip, send an email to: firstname.lastname@example.org.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV