(Reuters – Lucia Mutikani)
Economic growth slowed in the second quarter as companies invested heavily in equipment from abroad and the pace of consumer spending eased, raising concerns about the recovery in the rest of 2010. Gross domestic product expanded at a 2.4% annual rate, the Commerce Department said in its first estimate on Friday, after an upwardly revised 3.7% growth pace in the January-March quarter. Financial markets had forecast GDP, which measures total goods and services output within U.S. borders, growing at a 2.5% rate in the second quarter from a previously estimated a 2.7% rate for the first three months of this year.
"The anticipated slowdown in the economy is happening. Will business investment fall off a cliff next quarter if domestic consumer spending continues to flag?" said Lee Olver, managing director of financial strategies at Madison Williams & Co. in Houston.
A second report showed business activity in the nation's Midwest region expanded more than expected this month on strong orders. The Institute for Supply Management-Chicago business barometer rose to 62.3 from 59.1 in June and above market forecasts for reading of 56.5.
Separately, consumer sentiment dropped this month to a nine-month low, according to Thomson Reuters/University of Michigan's Surveys of Consumers. Read more here.
