The economy slowed a bit -- but Americans continued to spend
The U.S. economy experienced a modest slowdown in growth during the second quarter, with GDP increasing by 1.5% compared to 2.1% in the first quarter, largely due to decreased government spending and increased imports. Despite this, consumer spending remained robust at 2.1%, though rising inflation is forcing Americans to dip into savings or borrow money.
Why it matters
This report provides a snapshot of the U.S. economic health, indicating a potential struggle for consumers to maintain spending habits amidst inflation, which could influence future Federal Reserve interest rate decisions and overall economic stability.
The U.S. economy grew more slowly this spring than it did earlier in the year, but consumers continue to spend freely.
Gross domestic product — the broadest measure of economic activity — grew at an annual rate of 1.5% in April, May and June, according to a report Thursday from the Commerce Department. That's a modest slowdown from the first three months of the year when GDP grew at a 2.1% pace. A decline in government spending and a jump in imports, which count against the domestic tally, account for much of the change.
Consumer spending continues to power the economy, growing at a solid 2.1% pace during the second quarter. It's not clear how long shoppers can keep that up, however, in the face of rising prices.
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