US economy slowed to 2.1% growth rate in second quarter

In this Wednesday, July 24, 2019 photo, the container ship Seaboard Atlantic is shown docked at PortMiami in Miami. The government says the U.S. economy grew more slowly in 2018 than it previously estimated, downgrading its estimate from 3% to 2.5%. President Donald Trump had frequently boasted of the 3% growth figure as evidence that his policies invigorated the economy. (AP Photo/Wilfredo Lee) In this Wednesday, July 24, 2019 photo, the container ship Seaboard Atlantic is shown docked at PortMiami in Miami. The government says the U.S. economy grew more slowly in 2018 than it previously estimated, downgrading its estimate from 3% to 2.5%. President Donald Trump had frequently boasted of the 3% growth figure as evidence that his policies invigorated the economy. (AP Photo/Wilfredo Lee)

By Associated Press July 26, 2019 6 min read

WASHINGTON (AP) – The U.S. economy slowed sharply in the April-June quarter even as consumers stepped up their spending.

The gross domestic product, the economy’s total output of goods and services, grew at a 2.1% annual rate last quarter, down from a 3.1% gain in the first quarter, the Commerce Department estimated Friday.

But consumer spending, which drives about 70% of economic activity, accelerated to a sizzling 4.3% growth rate after a lackluster 1.1% annual gain in the January-March quarter, boosted in particular by auto sales. The resurgent strength in household spending was offset by a widening of the trade deficit and slower business inventory rebuilding.

Economists also noted that business capital investment fell in the April-June quarter for the first time in three years. That weakness likely reflects some reluctance by businesses to commit to projects because of uncertainty surrounding President Donald Trump’s trade war with China.

Indeed, most analysts think the U.S. economy could slow through the rest of the year, reflecting global weakness and the trade war between the world’s two largest economies.