US Economy Slows to 1.5% Growth in Second Quarter Despite Strong Consumer Spending

The US economy experienced a slowdown in growth during the second quarter, with a gross domestic product (GDP) reading of just 1.5%. This marks a decrease from the first quarter's 2.1% growth and falls short of expectations.

The decline was driven by lower government spending, investments, and exports, while consumer spending was the primary driver of growth in the quarter. The White House Economic Council Director, Kevin Hassett, stated that he doesn't view GDP as a 'half-full glass,' but rather as a full one, highlighting the 4% increase in final sales.

The Commerce Department also released data on Personal Consumption Expenditures (PCE) prices, which rose to 3.7% over 12 months. Core PCE, excluding food and energy prices, came in at 3.3%, still above the Federal Reserve's target of 2%. Consumer spending increased by $65.2 billion in June, with health care leading services categories and motor vehicles driving goods spending.

The Federal Open Market Committee (FOMC) voted to maintain the current federal funds rate after a meeting on Wednesday. However, it was not a unanimous decision, as three committee members, Beth Hammack, Neel Kashkari, and Lorie Logan, voted for a quarter-point increase. Despite this divided vote, Federal Reserve Chairman Kevin Warsh emphasized his confidence in delivering stable prices.