Getty Images The numbers: The U.S. economy grew more slowly in the second quarter, updated figures confirm, and is slow growth is expected to persist through the end of the year largely because of the festering trade fight with China.
Gross domestic product, the official score card for the economy, grew at a 2% annual pace from April to June, the government said Thursday. That was unchanged from the previous estimate.
What happened: Consumer spending was exceedingly strong in the spring, though the government trimmed its estimated increase to 4.6% from 4.7%. Households spent a bit less on takeout and other prepared foods.
Consumer outlays account for almost 70% of all U.S. economic activity in the U.S. Households have been buoyed by the strongest labor market in years, which has delivered rising wages and an extremely low unemployment rate.
The decline in businesses investment was revised to 1.4% from 1.1%, reflecting a bigger drop in outlays on manufacturing-related structures. Heavy industry has been hurt by the trade fight with China, a strong U.S. dollar and faltering global economy that’s led to weaker exports.
Adjusted pretax corporate rose at a 3.8% clip in the second quarter. Still good, but not quite as strong as the prior 5.3%.
Government spending, meanwhile, increased at a 4.8% pace instead of 4.5% as previously reported. State and localities spent more on construction of roads and buildings.
Most other figures in the GDP report were little changed. GDP is revised twice after the initial release to take into account new or more accurate information.
Read: Consumer confidence sinks to 3-month low on trade worries, softer jobs market
Big picture: A look in the rearview mirror shows the economy began to slow in the spring despite robust consumer spending. The road ahead doesn’t look much different.
Economists polled by MarketWatch predict the U.S will grow about 2% in each of the final two quarters of 2019.
The biggest drag on growth is the ongoing trade fight with China. Unless that’s revolved soon, the U.S. economy is likely to remain constrained. The dispute has sapped exports, manufacturing, farming and business investment. A potential effort by Democrats to impeach President Trump won’t help.
What they are saying? “We expect the economy to avoid a recession, but the trade war and next year’s presidential election mean the outlook is more uncertain than usual,” economists at Capital Economics said.
Market reaction: The Dow Jones Industrial Average DJIA, -0.26% and S&P 500 SPX, -0.53% fell slightly in Thursday trades. The 10-year Treasury yield TMUBMUSD10Y, +0.00% was little changed at 1.70%.