US GDP growth slows down to 2 percent in second quarter

The gross domestic product growth of the United States has slowed down to two percent in the second quarter. The slow down is a bit more than initially thought in the second quarter as the strongest growth in consumer spending in four and a half years was offset by declining exports and a smaller inventory build.

The GDP increased at a 2.0 percent annualized rate, the Commerce Department said in its second reading of second-quarter GDP on Thursday. That was revised down from the 2.1 percent pace estimated last month.

The economy grew at a 3.1 percent rate in the January-March quarter. It expanded by 2.6 percent in the first half of the year.

The downward revision was in line with the expectations of the ecconomists. The economic expansion, now in its 11th year, is under threat from the Trump administration's year-long trade war with China, which has undercut business investment and manufacturing.

The deterioration in trade relations between the two economic giants has roiled global stock markets and triggered an inversion of the US Treasury yield curve, fanning fears of a recession.

While manufacturing and housing data suggest the economy continued to slow early in the third quarter, strong consumer spending, backed by the lowest unemployment rate in nearly 50 years, has tempered some concerns about a downturn.

Federal Reserve Chair Jerome Powell told a conference of central bankers last week that the economy was in a "favorable place," but reiterated that the US central bank would "act as appropriate" to keep the economic expansion on track.

The Fed lowered its short-term interest rate by 25 basis points last month for the first time since 2008, citing trade tensions and slowing global growth. Financial markets have fully priced in another quarter-percentage-point cut at the Fed's Sept. 17-18 policy meeting.

The economy is also losing speed as the stimulus from the White House's USD 1.5 trillion tax-cut packages and a government spending blitz fades. Economists are forecasting growth this year around 2.5%, below the Trump administration's three percent target.