The Commerce Department’s final review of second-quarter gross domestic product, the broadest measure of economic output, showed that economic growth was unchanged from the second estimate, remaining at an annual rate of 2.1%.
However, consumer spending, the US economic engine, was revised much lower, to an annual rate of 0.8%, according to data released Thursday. This is lower than the 1.7% rate reflected in the previous estimate. Spending in the second quarter grew at its weakest pace since the first quarter of 2022, when it was flat.
The huge revision released on Thursday shows that Americans have cut their spending much more since the beginning of the year than previously thought. Consumer spending represents about 70% of economic output. American consumers spent less on services and non-durable goods, which are products that are meant to last a short time, such as clothing, cleaning supplies and beauty products.
The second quarter runs from April through June, but the Commerce Department publishes consumer spending figures on a monthly basis. In July, consumer spending jumped 0.8%, the strongest monthly increase since January, as shoppers spent on concerts, movies, toys and entertainment equipment. Spending figures for August will be published on Friday.
A report from Moody’s Investors Service said on Wednesday that consumer spending is expected to slow further in the coming months as Americans become more cautious about making purchases.
“Spending on deferred travel and experiences has increased post-pandemic. “However, tighter budgets may prompt consumers to cut back on spending on discretionary services, especially as services continue to swell,” Claire Lee, vice president of credit strategy and research at Moody’s Investors Services, wrote in a statement.
This story is evolving and will be updated.
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