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– August 12, 2016

The weak showing masks widely divergent performance among the GDP components. Consumer spending continues to grow, with real personal consumption expenditures rising a strong 4.2 percent. On a year-over-year basis, real personal consumption spending accelerated to 2.7 percent from 2.4 percent in the first quarter. This contrasts starkly with business investment, which declined on a year-over-year basis for the second quarter in a row (Chart 1). Government spending and inventory liquidation also dragged down growth. We expect the current pattern of consumer-led growth to continue. The weakness in business investment may be laying the foundation for a surprise uptick in real GDP growth in the second half.
 

 

Next/Previous Section:
1.Overview
2. Economy
3. Policy
4. Investing
5. Appendix

AIER Staff

Founded in 1933, The American Institute for Economic Research (AIER) educates people on the value of personal freedom, free enterprise, property rights, limited government, and sound money. AIER’s ongoing scientific research demonstrates the importance of these principles in advancing peace, prosperity, and human progress.

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