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GDP even more anemic than estimated in Q2

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GDP even more anemic than estimated in Q2

GDP growth revised downward to 1.1%.

US estimated real gross domestic product increased at an annual rate of 1.1% in the second quarter, according to a revised estimate issued by the Commerce Department today. The department’s first estimate for the quarter came in at 1.2%.  This follows downwardly-revised Q1 GDP growth of 0.8%. 

Analysts had initially expected a 2.6% increase for the quarter, while the revised number was in line with current expectations.

The sluggish results were primarily attributed to a significant reduction in business inventories during the quarter, offset by stronger consumer spending.

While the seemingly strong labor market continues to indicate a strengthening of growth in the coming quarters, various indicators such as tepid manufacturing growth and weak commodities pricing continue to suggest headwinds for the US economy. Reflecting the outlook for more sluggish growth, London-based Capital Economics, an influential macroeconomic research firm, revised downward its expectations for the remainder of 2016, projecting GDP growth of only 1.5% for the year compared to its previous target of 2.0%.

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