In this Wednesday, May 8, 2019 photo, new buildings form part of the skyline in Boston’s Seaport district. On Thursday, Aug. 29, the Commerce Department issues the second estimate of how the U.S. economy performed in the April-June quarter. (AP Photo/Steven Senne)The U.S. economic landscape would look even bleaker if not for America’s consumers.
The economy slowed in the spring, and many analysts think the weakness will continue in the months ahead. Yet consumer spending, which drives about 70% of growth, accelerated in the April-June quarter at the fastest pace in nearly five years.
Households are showing a willingness to keep spending even in the face of rising anxiety about a possible forthcoming recession. At the same time, though, business investment is weakening in the face of uncertainties created by the increased taxes that President Donald Trump has imposed on hundreds of billions of dollars’ in imports – goods that many American businesses rely upon.
Despite the resilience consumers are showing, the overall economic picture is weakening. The gross domestic product, the broadest gauge of economic health, advanced at a moderate 2% annual rate in the April-June quarter, the government said Thursday, down from a 3.1% gain in the first quarter. Thursday’s revised figure for last quarter was slightly lower than the government’s initial estimate of 2.1% annual growth.
The slowdown could complicate Trump’s hopes that a surging economy will enhance his 2020 re-election hopes. He is counting on rising wages and low unemployment to keep consumers spending.