U.S. Economic Growth Sluggish in 2nd Quarter

(CN) - The U.S. economy grew at a sluggish pace in the spring, with robust consumer spending offset in part by a dip in new housing construction.

The Commerce Department said Friday that the nation's gross domestic product grew at a 1.2 percent annual rate between April and June far below the 2.6 percent most economists had forecast.

The gross domestic product is the government's broadest measure of the health of the U.S. economy.

The good news in the report is that consumer spending which accounts for 70 percent of economic activity grew in the spring, growing at an annual rate of 4.2 percent.

That was more than double the 1.6 percent rate in the first quarter, and also represents the biggest surge in consumer spending since the final three months of 2014.

But Housing construction, which had been doing well, shrank at an annual rate of 6.1 percent in the second quarter.

At the same time, businesses refrained from restocking their inventories by the sharpest amount since the first quarter of 2014.

Also, business nonresidential investment declined for a third straight quarter as the energy sector continued to struggle with falling oil prices.

While the numbers, coming on top of lackluster growth during the winter, suggests the economy is slowing down, economists believe it will rebound the second half of the year - especially as businesses seek to replenish their inventories.

Speaking of the winter, the Commerce Department Friday revised down its estimate of first-quarter growth to 0.8 percent from 1.1 percent.

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