The U.S. economic output of goods and services grew more slowly in the second quarter than previously estimated as imports swelled the trade deficit while inventory expansion slowed, the Commerce Department said.
The nation's gross domestic product grew at a 1.6 percent annual rate in the April-to-June period, down from an initial estimate of 2.4 percent last month and much slower than the first quarter's 3.7 percent pace.
Many economists had expected a sharper drop. Most expect GDP growth to remain weak through the rest of the year.
By The Numbers: U.S. Foreign Trade.
A slowing economy would cut into transportation volume, which this year has recovered strongly from last year's recession levels.
The American Trucking Associations reported this week that truck tonnage in July was up 7.4 percent, the eighth straight month of year-to-year increases. Data from major railroads show strength in shipments of raw materials and some finished goods related to manufacturing. Intermodal rail shipments last week were up 24.2 percent from a year earlier and were 2.6 percent above the comparable week in 2008.
PIERS Global Intelligence Solutions, a sister company of The Journal of Commerce, projects increases of 10.3 percent in containerized imports and 5.2 percent in exports this year. PIERS predicts growth rates will slow during the second half of the year, weighed down by cautious consumers, a weak housing market and high unemployment.
The economy has grown for four straight quarters, but that growth has averaged only 2.9 percent, a weak pace after a steep recession. The economy needs to expand at about 3 percent just to keep the unemployment rate, currently 9.5 percent, from rising.
Most of the decrease in second quarter GDP came from a widening trade deficit, which subtracted nearly 3.4 percentage points from second quarter growth -- the most since 1947, the government said.
Business investment in new machinery, computers and software drove much of the growth in GDP last quarter, increasing nearly 25 percent. But much of that spending involved the purchase of imported goods, which surged 32.4 percent, the most since 1984. That overwhelmed a 9.1 percent increase in exports.
The latest GDP revision indicates consumer spending rose at a 2 percent annual rate in the second quarter, slightly higher than the first quarter's 1.9 percent.
Friday's report was the second of three GDP estimates the government makes each quarter.
-- Contact Joseph Bonney at firstname.lastname@example.org.