America's Economy Falters in Q2

03 August 2004

Although still on an upward track, the growth rate in the world's largest economy decelerated in the three months to June 30, reports the US Commerce Department.

Following a bullish first quarter, in which the growth curve was revised upward to 4.5%, expansion of the economy slowed to 3% in Q2. This the government agency attributed to consumers' reigning-in their previous spending spree amid sharp increases in oil and other energy prices.

But another survey, the closely watched Consumer Confidence Index from the University of Michigan, indicated a marginal improvement in consumer sentiment during July, creeping up from 95.6 in June to 96.7.

In line with the government data, the UoM 'current conditions' index for July faltered from 106.7 to 105.2; although its 'expectations' index presaged rosier times ahead by rising from 88.5 to 91.2.

Comments John Lonski, chief economist at Moody's Investor Service: "We're looking at a more pronounced than expected slowing of economic activity, mostly because of the shockingly small increase by consumer spending."

Data sourced from: USA Today; additional content by WARC staff