NEW YORK (CNN/Money) -
The pace of economic growth was slower in the second quarter than originally estimated, the government said Friday, as the latest reading on gross domestic product came roughly in line with economists' forecasts.
GDP, the broadest measure of the nation's economic activity, grew at an annual growth rate of 2.8 percent in the second quarter, the Commerce Department said, versus its preliminary reading of 3 percent growth late last month.
Economists surveyed by Briefing.com forecast that the growth rate would be revised lower to 2.7 percent, while a Reuters poll found a median estimate of 2.8 percent growth.
"It does indicate that the second quarter was a disappointing quarter," Economy.com Chief Economist Mark Zandi told Reuters. "Growth slowed sharply. Consumers became more cautious and our trade deficit ballooned. The economy was weighed down by higher energy prices."
The pace of growth has cooled considerably from the 4.5 percent rate in the first quarter, and is the slowest gain for the economy since a 1.9 percent rise in the first quarter of 2003.
The department said the main reason for the downward revision was higher imports and lower exports than initially estimated. The June U.S. trade report showed the largest trade deficit in the nation's history, at $55.8 billion.
The chain deflator, a closely watched inflation measure, was unchanged at a 3.2 percent annual rate of increase, the same as economists' forecasts. The index measuring prices paid by consumers for all goods showed a 3.2 percent growth rate, down from the 3.3 percent increase in the first quarter as well as in the first reading of second-quarter GDP.
The index for prices paid excluding volatile food and energy was up at an annual 1.7 percent, showing inflation even more in check from the initial 1.8 percent estimate for the second quarter and the 2.1 percent rise posted in the first quarter.
"The good news is that the inflation number was also revised down slightly but is still running higher than we saw a year or so ago," A.G. Edwards & Sons Chief Economist Gary Thayer told Reuters.
Consumer spending, which is responsible for about two-thirds of the nation's economy, rose at an annual 1.6 percent rate, down significantly from the 4.1 percent growth in the first quarter, but better than the initial estimate of 1 percent growth. Consumer spending on durable goods was unchanged in the latest reading, rather than down 2.5 percent in the July report.
"It's the third quarter that matters now, and the July data show a reasonably strong bounce back," Ram Bhagavatula, chief economist for the Royal Bank of Scotland Financial Markets, told Reuters. "The third quarter will be stronger. We're estimating 3.5 percent growth. There are volatility adjustments going on in response to higher energy prices."