NEW YORK, July 30 (Xinhua) -- U.S. gross domestic product (GDP) growth slowed unexpectedly in the second quarter, with the economy expanding at an annualized rate of 1.5 percent, while underlying inflation metrics remained stubbornly high, official data showed on Thursday.
The advance estimate released by the U.S. Bureau of Economic Analysis (BEA) for the April-June period fell considerably short of market expectations, which had forecast a 2.1-percent growth rate. The reading also represents a noticeable deceleration from the first quarter, when its GDP increased by 2.1 percent.
According to the BEA, increases in consumer spending, investment and exports supported the overall economic expansion. However, these gains were partly offset by a downturn in government spending. Imports, which subtract from GDP calculations, increased by 11.5 percent in the second quarter in comparison with 11.8 percent in the first quarter.
Despite the softer topline growth, final sales to private domestic purchasers, a key measure combining consumer spending and gross private fixed investment, accelerated to 3.9 percent in the second quarter, up from 1.7 percent in the first quarter.
However, the report also highlighted intensifying inflationary pressures. The price index for gross domestic purchases jumped 5.7 percent in the second quarter, significantly higher than the 3.6-percent rise recorded in the previous quarter.
The personal consumption expenditures (PCE) price index, the inflation gauge preferred by the Federal Reserve (Fed), increased by 5.1 percent, from a 4.6-percent rise in the first quarter. Even when excluding volatile food and energy costs, the core PCE price index rose by a solid 3.4 percent.
The disappointing GDP report and persistent inflation data arrived just hours after the Fed concluded its latest monetary policy meeting. On Wednesday, the Fed opted to maintain its target range for the federal funds rate at 3.5-3.75 percent, marking its fifth consecutive meeting with a wait-and-see stance as policymakers struggle to balance slowing economic growth with elevated consumer prices. ■
