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| US GDP growth misses forecasts despite spending surge | US GDP growth misses forecasts despite spending surge |
| (35 minutes later) | |
| The US economy grew at a much slower pace than expected in the second quarter and GDP was revised down in the first three months of the year. | The US economy grew at a much slower pace than expected in the second quarter and GDP was revised down in the first three months of the year. |
| The world's largest economy grew at an annual rate of 1.2% in the three months to June, far below forecasts of 2.6%, | The world's largest economy grew at an annual rate of 1.2% in the three months to June, far below forecasts of 2.6%, |
| Growth for the first quarter was revised down from 1.1% to 0.8%. | Growth for the first quarter was revised down from 1.1% to 0.8%. |
| Conversely, consumer spending surged in the three months to June by an annual pace of 4.2% - the fastest pace since the fourth quarter of 2014. | Conversely, consumer spending surged in the three months to June by an annual pace of 4.2% - the fastest pace since the fourth quarter of 2014. |
| The Federal Reserve indicated on Wednesday it was still on course to raise interest rates this year after "near-term risks", such as slowing employment, diminished. | The Federal Reserve indicated on Wednesday it was still on course to raise interest rates this year after "near-term risks", such as slowing employment, diminished. |
| Steven Englander, global head of foreign exchange strategy at Citigroup, said: "This isn't bad enough to signal that the US economy is falling apart, but it's another nail in the coffin of a September Fed hike." | |
| Although consumer spending grew, business investment, which includes stock, supplies, equipment and buildings, fell by 9.7% in the second quarter. | |
| Government figures released on Thursday had hinted at subdued business spending. The US trade deficit - the different between imports and exports - had widened to $63.3bn in June from $61.1bn the month before. | Government figures released on Thursday had hinted at subdued business spending. The US trade deficit - the different between imports and exports - had widened to $63.3bn in June from $61.1bn the month before. |
| The latest GDP figures are the first estimate of growth for the April-to-June quarter, and a second reading based on more data will be announced on 26 August. | The latest GDP figures are the first estimate of growth for the April-to-June quarter, and a second reading based on more data will be announced on 26 August. |
| Chris Williamson, chief economist at Markit, said: "While no doubt disappointing, the GDP data are backward looking and whether or not the Fed hikes interest rates again this year depends more on the future data flow than what happened back in the second quarter. | Chris Williamson, chief economist at Markit, said: "While no doubt disappointing, the GDP data are backward looking and whether or not the Fed hikes interest rates again this year depends more on the future data flow than what happened back in the second quarter. |
| "However, the ongoing softness of growth in the second quarter will no doubt add to calls for policymakers to err on the side of caution and as such greatly reduces the chance of any rate hike before December." | "However, the ongoing softness of growth in the second quarter will no doubt add to calls for policymakers to err on the side of caution and as such greatly reduces the chance of any rate hike before December." |