Brazil steers clear of recession as Q2 GDP growth accelerates

U.S. economy slows in second quarter; consumer spending robust

Gross domestic product increased at a 2.0% annualized rate, the government said in its second reading of second-quarter GDP on Thursday.

Apart from that, other U.S. data revealed on Thursday (August 29th) had rekindled hopes of averting an imminent recession, as trade deficit had narrowed sharply in July while United States exports had also witnessed a rebound.

Trump contends that his economic program of tax cuts, deregulation and get-tough trade policies will give the country sustained GDP growth of 3% a year or better, a big improvement on the 2.3% gains of the Obama years.

The 2 percent annual GDP growth in the April-June quarter represented a slight downward revision from the government's first estimate of a 2.1 percent growth rate.

Trade relations are still worsening as the United States and China engage in fisticuffs on the global stock market and slap tariffs on trade goods.

Business investment spending turned negative in the second quarter, falling at a 0.6 percent annual rate, which many economists believe occurred because of the uncertainty among businesses resulting from Trump's trade war. The U.S. economy slowed in the spring, and most analysts expect it to weaken further in the months ahead.

The government will revise GDP once more at the end of September before it releases third-quarter data. The recovery became the longest in USA history last month but analysts have begun to worry whether trade wars, plunging stock markets and such factors as sluggish factory output and a tepid housing market might be signaling growing risks of a recession.

Slow-moving Hurricane Dorian heads toward southeast U.S.
Much depends on the intensity of the high pressure zone that has been pushing Dorian west toward the northern Bahamas and Florida. Other recent Category 5's include Hurricane Irma , which battered the Caribbean and the southern United States in September 2017.

A slowdown in annual growth to 2.2% would be near the 2.3% annual gains seen since the decade-long expansion began in June 2009.

Price pressures also picked up noticeably, with the price index for gross domestic purchases growing by 2.2% in the second quarter after rising by 0.8% over the first three months of the year, but unchanged from the government's initial calculation.

Last week, during the Jackson Hole Symposium in Wyoming, Federal Reserve Chair Jerome Powell said the economic outlook remains strong but promised the US central bank will "act as appropriate" to sustain the record economic expansion.

The president, who last week called Federal Reserve Chairman Jerome Powell an "enemy", has been demanding that the Fed cut rates by a full percentage point - a proposal that most economists regard as wildly excessive. That drop was offset by the increase in consumer spending to a rate of 4.7%, up from an initial estimate of 4.3%. Trump has pledged to achieve annual growth at annual rates of 3 percent or better. The economy grew at a 3.1% rate in the January-March quarter. Talks between the two have deteriorated in recent months as the two impose retaliatory tariffs on each other. Many economists expect this trend to continue, dragging growth further down for the rest of the year.

In a separate report Thursday, the Labor Department said the number of Americans filing claims for unemployment benefits, seen as a good proxy for layoffs, rose by 4,000 last week to a still-low 215,000. Weak capital goods imports suggests business investment could remain subdued after contracting in the second quarter for the first time since the first quarter of 2016.

Obviously, 0.1% isn't a huge change, but growth in the quarter was already disappointing to begin with. Spending on homebuilding contracted for a sixth straight quarter, the longest such stretch since the Great Recession.

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