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US Economic Growth Slows

WASHINGTON: The American economy cooled in the second quarter of 2019 to a still-solid pace but officials nevertheless slashed one of President Donald Trump’s favourite economic numbers, government data showed on Saturday.

Newly revised data covering the past five years now show the world’s largest economy actually slowed in the year after Trump and congressional Republicans pushed through a sweeping, $1.5 trillion tax cut.

The change dealt a sharp blow to Trump’s economic message and also highlighted how momentum had deteriorated in the final months of 2018 when the Federal Reserve last raised interest rates in defiance of intense pressure from Trump.

The Commerce Department reported that GDP in the April-June quarter slowed to 2.1pc from the first three months of the year, down sharply from 3.1pc growth in the first quarter, but that was better than expected, helped by strong consumer spending.

Taken together with the new data portrayed an economy that enjoys robust strength in some quarters but has begun to sputter worryingly in others, even while the US is outshining sluggish economies in Europe, Japan and elsewhere.

Analysts had expected second-quarter growth of just 1.8 percent, but the economy got a boost from strong spending on autos, food and clothing.

“Not bad,” Trump tweeted Friday, “considering that we have the very heavyweight of the Federal Reserve anchor wrapped around our neck.”

“USA is set to zoom!” Federal spending also took its biggest leap in a decade — with non-defence expenditure rising at the fastest pace in 21 years — a one-time jolt when the government resumed paying employees following the five-week partial government shutdown at the start of the year.

But that was not enough to make up for tumbling investment in factories and commercial buildings, which sank more than 10pc for the quarter, and falling income from software royalties and other intellectual property.

Amid a global economic slowdown, weakening foreign demand for US exports meant American factories sold fewer autos, parts and factory equipment.

The ailing American manufacturing sector also produced fewer non-durable goods while retail and wholesale trade softened.

Declining travel exports, dominated by tourists and foreign students, also weighed growth down for the quarter.