Upon further review the Commerce Department reports that economic growth cooled in the second quarter at amuch steeper rate than previously reported.
Economic growth clocked in at a 2.6 percent pace in the spring, even slower than previously thought.
The latest reading on the gross domestic product, released Thursday by the Commerce Department, reinforced expectations that the economy is settling into a spell of somewhat sluggish activity.
The growth rate was weaker than the 2.9 percent figure estimated for the April-to-June quarter a month ago. Many economists were predicting that this estimate would hold and thus there would be no revision to the overall GDP figure.
The second-quarter slowdown comes after the economy sprinted ahead in the first three months of this year, expanding at a 5.6 percent pace, the strongest spurt in 2 1/2 years.
The economy has shifted into a slower gear due to a number of factors, including the cooling of the once sizzling housing market, the toll of once surging energy prices and the impact of the Federal Reserve’s two-year string of interest rate increases.
Consumer spending, which accounts for a big chunk of economic activity, rose at a 2.6 percent pace. That was the same as previously estimated but marked a big pullback compared to the first quarter’s 4.8 percent growth rate.
Business investment in equipment and software dropped at a rate of 1.4 percent in the spring, slightly less steep than previously estimated but a backslide from the stellar 15.6 percent growth rate in such investment seen in the first quarter.
Companies’ profits also lost ground in the spring. One measure of after-tax profits in the GDP report showed that profits rose by just 0.3 percent, down from a 14.8 percent increase in the first quarter.
An inflation gauge tied to the GDP report showed that core prices – excluding food and energy – advanced at a rate of 2.7 percent in the second quarter. Although that was down a notch from a previous estimate, it still marked a pickup in core inflation from the first quarter’s 2.1 percent pace and shows inflation is still hovering outside the Fed’s comfort zone.
The second quarter’s 2.6 percent pace was the slowest since the final quarter of last year when the economy was reeling from the blows of the Gulf Coast hurricanes.