The economy in the U.S. grew less than previously forecast in the second quarter, reflecting slower gains in consumer spending and farm inventories.
The world’s largest economy expanded at a 1.3 percent pace from April through June after growing at a 2 percent rate in the first quarter. The revision compared with a prior estimate of 1.7 percent and a Bloomberg survey’s 1.7 percent median forecast.
Household purchases, which account for about 70 percent of the economy, rose at a 1.5 percent annual pace last quarter, the slowest in a year after a previously reported 1.7 percent gain.
Purchases advanced at a 2.4 percent rate in the prior three-month period.
“Consumption is not good,” said Thomas Simons, an economist at Jefferies Group Inc. in New York. “Consumers are still driving GDP but only at a very modest pace.”
The drought this year caused the government to revise down estimates for farm inventories, which also contributed to the smaller reading in GDP. This quarter’s stockpile readings will also be depressed by smaller farm inventories because of the weather, the Commerce Department said.
After growing at a 4 percent pace in the last three months of 2011, the deceleration over the past two quarters shows the world’s largest economy is struggling to gain momentum as consumers and companies curb spending.
To speed the expansion and reduce 8.1 percent unemployment, the Federal Reserve said this month it will expand its holdings of long-term securities and keep its target interest rate near zero percent until at least mid-2015.
Another report showed orders placed with American factories for durable goods in August slumped 13 percent, the most since January 2009 and paced by a plunge in demand for civilian aircraft.