US economic growth slows sharply in second quarter

US growth slowed sharply in the second quarter as its trade deficit widened and firms put the brakes on stock building.

Official figures showed the world’s biggest economy expanded at an annualised rate of 2.1% during the April-June period, down from 3.1% in the previous period.

It slightly beat economists’ expectations but was well short of the Trump administration’s target of 3% growth.

The GDP figures come as the US Federal Reserve considers cutting interest rates next week for the first time in a decade as it weighs up rising risks – chief among them Washington’s trade war with China.

Consumer spending, which accounts for more than two-thirds of US economic activity, provided a bright spot as it accelerated after a lacklustre first quarter.

But a stuttering export performance was accompanied by falling business investment – the first decline in three years, possibly reflecting uncertainty sparked by the trade war.

Most analysts think the US economy could slow the rest of the year, reflecting global economic weakness and the trade tensions.

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That would be seen as a disappointment for Donald Trump’s aim of using tax cuts, deregulation and tougher trade enforcement to lift growth.

However, America’s labour market has painted a rosier picture, with the most recent data showing jobs growth in June that was much stronger than expected.

Commerce secretary Wilbur Ross sounded a bullish note on the GDP figures.

He said: “The Trump economy is growing strong and, on the heels of 3.1% growth in the first quarter, is poised to continue expanding.

“President Trump’s ambitious agenda of deregulation, tax reform, and job creation is making the US the premier place for business, and is restoring our position as an economic leader on the world stage.”

Source: SKY NEWS

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