REUTERS/Brian Snyder

The Bureau of Economic Analysis said on Friday that gross domestic product, a measure of all the goods and services produced in a country, slowed from April to June.

Consumer spending at home partially offset weakness caused by global trade disputes that began more than a year ago.

The economy expanded in 2018 at a pace just under the Trump administration's goal of 3%, but growth was widely expected to slow this year.

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The American economy slowed sharply in the second quarter, but still expanded at a solid pace. Newly released data reflected consumer spending that partially offset weakness caused by global trade disputes that began more than a year ago.

The Commerce Department on Friday estimated that gross domestic product, a measure of all the goods and services produced in a country, rose by 2.1% from April to June, a decline from the previous quarter's 3.1% figure. Economists surveyed by Bloomberg had expected an increase of 1.8%.

Consumer spending, which accounts for more than two-thirds of activity in the economy, picked up to a robust pace of 4.4% in the second quarter. A key measure of inflation, the price index for personal consumption expenditure, rose by 2.3% from April to June, compared with a 0.4% increase in the first quarter.

Businesses spent less on capital, with nonresidential fixed investment falling by 0.6%. Exports plummeted 5.2% after an unexpected jump in the first quarter, while imports rose. Trade figures have been volatile since President Donald Trump ignited tariff wars with several major economies last year.

While second-quarter growth came in above estimates, the report likely reinforced key concerns for the Federal Reserve ahead of its policy meeting next week. Chairman Jerome Powell said in June that the central bank was prepared to step in if trade conditions worsened.

The reading may have overstated the growth rate because of an unusually sharp jump in government spending, said Austan Goolsbee, who was the chairman of the Council of Economic Advisers in the Obama White House.

"Business investment actually shrinking is a troubling sign," he said. "Fortunately, consumer spending remains robust. But you have to think the Fed will view this as weakness overall."

At the beginning of 2019, GDP growth was far above estimates, at 3.1%. But the print was helped by a sharp jump in exports, while underlying data pointed to slower growth.

"The factors that contributed to a surge in first-quarter growth — namely, a contraction in imports and rising unsold inventories — reflect concerns over future trade policy and slowing demand," said Cailin Birch, the global economist at the Economist Intelligence Unit. "They point to a moderation in GDP growth later in the year."

The Commerce Department said Friday that the economy expanded slower than originally thought in 2018, at 2.5%, well below the Trump administration's goal of 3%. That was in part helped by the $1.5 trillion tax-cut legislation passed in 2017 and increased public spending.

A weaker second-quarter reading makes it less likely that GDP will reach White House estimates for the year. The Council of Economic Advisers forecasted a print of more than 3% this year, far above a Federal Reserve forecast of 2% to 2.2%.

Friday's reading is preliminary; a second estimate for the second quarter is scheduled to be released August 29.

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