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: email@example.com.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $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
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV