US economy only slightly down on predictions
July 29, 2005
While US economic growth slowed down a bit, to 3.4 percent, in the second quarter according to a preliminary estimate from the Commerce Department, Treasury Secretary John Snow said on Friday that the economy is on the right path.
Growth was just off the predicted 3.5 percent for the quarter ending in June.
The report showed consumer spending up 3.3 percent, after a 3.5 percent growth rate in the first quarter. Spending on durable goods, including automobiles, was up by 8.3 percent in the quarter.
Exports were up by 14.5 percent while imports fell 2 percent. Corporate investment rose by 9.3 percent on the quarter, but inventories were down.
Second quarter consumer inflation was up, with the personal consumption expenditure price index up at an annual rate of 3.3 percent, an increase from 2.3 percent in the first quarter.
On the other hand, the core PCE price index, which takes food and energy costs out of the equation, was only up at a rate of 1.8 percent in the quarter, down from the 2.4 percent growth of the first quarter.
While announcing the second quarter results, the Commerce Department revised growth figures from previous years downward, primarily due to lower estimates of investment in information technology and software.
Commerce said that between 2001 and 2004, the economy actually grew at a rate of 2.8 percent per year rather than by the previously announced 3.1 percent per year.