Dovunque sia un saluto a gastro
Friday July 28, 9:21 PM
Growth slows, prices up in second quarter
By Glenn Somerville
WASHINGTON (Reuters) - U.S. economic growth slowed abruptly during the second quarter to less than half the pace seen at the beginning of the year, while a key gauge of inflation accelerated, the Commerce Department said on Friday.
The sharp slowdown raised expectations that the Federal Reserve might halt its two-year-old campaign of interest-rate rises, and fueled a broad-based rise in bond prices on hopes a rate rise pause was near.
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Gross domestic product grew at a 2.5 percent annual rate in the April-June quarter, well below Wall Street analysts' forecasts for 3 percent and less than half the robust 5.6 percent rate registered in the first quarter.
Slower consumer spending, especially on costly durable goods like new cars, was a key reason. But export growth also slowed, government spending was weaker and housing investment turned down.
At the same time, an inflation gauge favored by the Federal Reserve - a measure of personal consumption expenditure prices minus food and energy - jumped at a 2.9 percent rate in the second quarter, well ahead of the first quarter's 2.1 percent.
Department officials said it was the fastest rate of increase for the gauge of so-called core inflation in nearly a dozen years, since the third quarter of 1994 when it jumped at a 3.2 percent rate.
The dollar's value weakened against other major currencies, while the stock futures market pointed to higher prices at the opening of trade.
"GDP is surprisingly low and it means less chance of the Fed doing something," said economist Robert Macintosh of Eaton Vance Management in Boston.
Foreign exchange analyst Korman Tam of MG Financial in New York similarly said the GDP report appeared to buttress signs of a broad-based slowdown reported earlier in the week in the Fed's anecdotal Beige Book survey of national economic conditions.
"It confirms suspicions and raises expectations that the Fed will actually pause in August," Tam said.
Separately, the Labor Department reported that its Employment Cost Index, which covers wages, salaries and benefits, climbed by a bigger-than-expected 0.9 percent in the second quarter. That exceeded the first quarter's 0.6 percent rate of increase and was the largest since the first quarter of 2005 -- a potential warning sign on inflation.
The economy had been widely expected to slow after a sizzling first quarter, in part because a cooling housing market coupled with soaring gasoline prices is expected to act as a brake on consumer spending. Fed Chairman Ben Bernanke told Congress last week he expected softer growth to restrain inflation over time, though it was not apparent in Friday's second-quarter GDP data.
The GDP report included annual revisions that covered the period from the beginning of 2003 through 2005. They showed moderately slower growth than first estimated, with the economy growing at an average annual rate of 3.2 percent over the period, 0.3 percentage point less than previously reported.
During the second quarter, consumer spending that fuels about two-thirds of national economic activity increased at a 2.5 percent annual rate, sharply below the first quarter's 4.8 percent. Business investment slowed to a 2.7 percent rate of increase, a fraction of the first quarter's 13.7 percent and the slowest since a 1.7 percent rate of growth in the first quarter of 2004.
Business spending on new computers and software, after soaring at a 15.6 percent rate in the first quarter, shrank 1 percent in the second quarter, the first fall in this category of spending since the start of 2003.
Underlining the growing softness in housing, investment in residential construction shrank for a third successive quarter, declining at a 6.3 percent rate during the second quarter after falling 0.3 percent in the first quarter and 0.9 percent in the final quarter of last year.
