How did the US economy perform in the second quarter and what were the key movers and shakers?

[John Naronha]

[Ignatius Bose]

The US economy expanded at a slower annual pace of 2.1% in the second quarter from 3.1% in the first three months of this year, beating economists expectations of a 1.9% reading. The key drivers of growth were led by consumer and government spending. While the former expanded by 4.3% in the three months to 30th June, from 1.1% in the first quarter, as people spent more on food, drinks, clothing cars and trucks, government spending surged 5% during the quarter, partly driven by the federal outlay following the partial shutdown earlier this year.

Coming to the negatives, investment plunged by about 11% as businesses cut down on spending plans amid Washington’s trade dispute with China and a weakening global economy. Inventories, on the other hand, shrunk by $44.3bn, the most in a year, knocking off close to a full percentage point from the GDP numbers. The US trade deficit also exerted pressure on the GDP data with exports slumping 5.2% while imports edged marginally higher.