The economy in the U.S. grew less than previously forecast in the second quarter, reflecting slower gains in consumer spending and farm inventories.
The world’s largest economy expanded at a 1.3 percent pace from April through June after growing at a 2 percent rate in the first quarter. The revision compared with a prior estimate of 1.7 percent and the Bloomberg survey’s 1.7 percent median forecast.
Household purchases, which account for about 70 percent of the economy, rose at a 1.5 percent annual pace last quarter, the slowest in a year after a previously reported 1.7 percent gain. Purchases advanced at a 2.4 percent rate in the prior three- month period.
“Consumption is not good,” said Thomas Simons, an economist at Jefferies Group Inc. in New York. “Consumers are still driving GDP but only at a very modest pace.”
The drought this year caused the government to revise down estimates for farm inventories, which also contributed to the smaller reading in GDP. This quarter’s stockpile readings will also be depressed by smaller farm inventories due to the weather, the Commerce Department said.
After growing at a 4 percent pace in the last three months of 2011, the deceleration over the past two quarters shows the world’s largest economy is struggling to gain momentum as consumer and companies curb spending. To speed the expansion and reduce 8.1 percent unemployment, the Federal Reserve said this month it will expand its holdings of long-term securities and keep its target interest rate near zero until at least mid-2015.
Another report showed orders placed with American factories for durable goods in August slumped 13 percent, the most since January 2009 and paced by a plunge in demand for civilian aircraft. Bookings for non-defense capital equipment excluding airplanes, a proxy for business investment, climbed 1.1 percent last month after decreases of 5.2 percent in July and 2.7 percent in June, the Commerce Department said.
Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, a sign the labor market is getting back on track.
Applications for jobless benefits decreased by 26,000 to 359,000 in the week ended Sept. 22, the lowest since July, Labor Department figures showed today. Economists forecast 375,000 claims, according to the median estimate in a Bloomberg survey.
Stock-index futures maintained gains after the reports, with the contract on the Standard & Poor’s 500 Index expiring in December rising 0.5 percent to 1,433.9 at 9:14 a.m. in New York.