US economic growth slowed in the second quarter as a capital investment drive by businesses sucked in imports at the fastest pace since the first quarter of 1984.
Gross domestic product expanded at a 2.4 per cent annual rate, the Commerce Department said in its first estimate today, after an upwardly revised 3.7 per cent growth pace in the January-March quarter.
Analysts polled by Reuters had forecast GDP, which measures total goods and services output within US borders, growing at a 2.5 per cent rate in the second quarter. The government had previously estimated a 2.7 per cent growth rate for the first three months of this year.
"The anticipated slowdown in the economy is happening. Will business investment fall off a cliff next quarter if domestic consumer spending continues to flag?" said Lee Olver, managing director of financial strategies at Madison Williams & Co. in Houston.
US stock index futures extended losses after the report, while prices for safe have government bonds rose. The US dollar trimmed gains versus the euro.
The economy, which is digging out of its longest and deepest recession since the 1930s, has now grown for four straight quarters. However, growth has been too tepid, making little impact on a high unemployment rate.
The sluggish economy and a 9.5 percent unemployment rate are eroding President Barack Obama's popularity and dimming Democrats' prospects in November's mid-term elections.Reuse content