US economic growth revised down slightly in Q2

President Jair Bolsonaro came to power in January with an ambitious plan to spur Brazil's economic activity

Gross domestic product increased at a 2.0% annualized rate, the Commerce Department said in its second reading of second-quarter GDP on Thursday. Yet the main driver of growth, consumer spending, remains vigorous enough to keep the economy growing steadily, if still modestly.

"As a result, we expect GDP growth to slow further in the third quarter, as relatively firm USA consumer spending fails to compensate for the weaker business outlook and slowing investment".

The U.S. economy grew at a rate of 2% in the second quarter, substantially slower than the first quarter and a tick weaker than the government's initial estimate for the period.

"These data suggest any further (growth) slowdown in the third quarter will be modest", said Paul Ashworth, chief US economist at Capital Economics in Toronto.

But an inverted yield curve (meaning that short-term interest rates for financial products are higher than long-term interest rates for such products) is, according to many economists, a sign of an economic slowdown - and data released by the Commerce Department on Thursday shows that growth for the US during 2019's second quarter was 0.1% less than originally thought.

The economic expansion, now in its 11th year, is under threat from the Trump administration's year-long trade war with China, which has undercut business investment and manufacturing.

While unemployment remains low, hiring has slowed in 2019, and business investment has dropped sharply.

The GDP report showed the trade deficit widened to $982.5 billion in the second quarter instead of $978.7 billion as reported last month.

The deterioration in trade relations between the two economic giants has roiled global stock markets and triggered an inversion of the U.S. Treasury yield curve, fanning fears of a recession.

Federal Reserve Chair Jerome Powell told a conference of central bankers last week that the economy was in a "favorable place", but reiterated that the USA central bank would "act as appropriate" to keep the economic expansion on track.

A slowdown in annual growth to 2.2% would be near the 2.3% annual gains seen since the decade-long expansion began in June 2009.

"But the economy is still soft and Copom is still likely to cut interest rates by a further 50 basis points when it meets next month", he said, referring to the central bank's rate-setting committee.

Gross domestic product grew 2% from April to June, down from the original estimate of 2.1% that was released in July.

In the April-June period, consumer spending shot up to an annual rate of 4.7 percent, the best showing since the final quarter of 2014.

The contribution to the quarterly rate of growth in GDP from government spending was also marked down, from 0.85 points to 0.77. They are forecasting that growth will slow even further next year and they say a recession can't be ruled out. Talks between the two have deteriorated in recent months as the two impose retaliatory tariffs on each other.

A report from the Labor Department on Thursday showed the number of Americans filing for state unemployment benefits increased 4,000 to a seasonally adjusted 215,000 last week.

Business investment declined at an unrevised 0.6% rate in the second quarter, the first contraction since the first quarter of 2016.

Tourism and travel was another sore spot, as falling revenues from foreign visitors helped shave a half percentage point off growth in services exports, hitting hotels, restaurants and tourist attractions.

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