Economy Grew By 2.5% in Q2

The govenment just reported that GDP grew by 2.5% for the second quarter, which is less than half the rate of the first quarter:

The second-quarter’s performance — which reflected the bite of high energy prices and rising interest rates on people and businesses as well as a cooling in the once red-hot housing market — was weaker than the 3 percent pace analysts were forecasting.
The 2.5 percent pace was the slowest since a 1.8 percent growth rate in final quarter of 2005, when the economy was suffering fallout from the devastating Gulf Coast hurricanes.
Even though the economy cooled in the second quarter, inflation heated up.
An inflation gauge closely watched by the Federal Reserve showed that core prices — excluding food and energy — jumped by 2.9 percent in the second quarter — far outside the Fed’s comfort zone. That was up from a 2.1 percent increase in the first quarter and marked the highest inflation reading since the third quarter of 1994, when core inflation rose by 3.2 percent.
The inflation reading was taken before the latest run-up in energy prices. Oil prices hit a record closing high of $77.03 a barrel on July 14. Gasoline prices also have marched higher, topping $3 a gallon in many areas.

Posted by on July 28th, 2006 at 9:15 am

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