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U.S. economy grew 1.5% in Q2, June core inflation 3.3%

financeJul 30, 202672343

The Commerce Department reported U.S. gross domestic product grew at an annualized 1.5 percent rate in the second quarter, down from 2.1 percent in Q1 and below economists' 1.8 percent forecast. The shortfall reflected a 0.3 percent decline in federal government spending and a 0.7 percent drop in inventories, while personal spending rose 2.1 percent and gross private domestic investment increased 0.5 percent. A separate report showed the personal consumption expenditures price index fell 0.1 percent in June, leaving headline PCE up 3.7 percent year over year and core PCE excluding food and energy up 3.3 percent annually with a 0.1 percent monthly gain. Energy prices surged earlier in the year after U.S. and Israel attacks on Iran but tumbled 5.9 percent in June, with gasoline down 9.2 percent; housing inflation rose 0.2 percent. Final sales to private domestic purchasers, a key demand measure, rose 3.9 percent for the quarter. The reports followed a divided Federal Reserve decision this week to hold its policy rate at 3.5 to 3.75 percent in a 9 to 3 vote, and markets reacted with higher Treasury yields and positive stock futures.

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