The U.S. economy grew somewhat more slowly in the spring than initially thought, according to revised data released on Thursday.
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Strong consumer spending (the government increased its estimate to 4.7 percent from 4.4 percent, the strongest in more than four years) was offset by decreases in state and local government spending, exports and private inventory investments.
Most economists expect the 11-year economic expansion in the U.S. to continue to moderate — a result of heightened tensions in the year-long trade war between the U.S. and China.
"The US-China conflict is likely to intensify further — and to increasingly take the shape of non-tariff barriers, such as investment restrictions — and the risk of an escalation in the US-EU trade dispute continues to loom," said Cailin Birch, global economist at The Economist Intelligence Unit.
"As a result, we expect GDP growth to slow further in the third quarter, as relatively firm US consumer spending fails to compensate for the weaker business outlook and slowing investment.”
Last week, during the Jackson Hole Symposium in Wyoming, Federal Reserve Chair Jerome Powell said the economic outlook remains strong but promised the U.S. central bank will "act as appropriate" to sustain the record economic expansion.
Most traders are pricing in a second 25 basis point interest rate cut during the Fed's September meeting.
The government will revise GDP once more at the end of September before it releases third-quarter data.