The government chopped its estimate of U.S. growth in the second quarter, as consumers and businesses spent and invested less than initially believed.
Gross domestic product in the April-to-June period increased by 1.3% instead of 1.7% as previously reported, the Commerce Department said Thursday in its third and final review of second-quarter growth.
A severe drought in the Midwest, which reduced crop yields, resulted in lower farm inventories. That accounted for much of the downward revision.
Economists surveyed by MarketWatch had expected second-quarter growth to be left unchanged at 1.7%. The economy grew at a 2.0% pace in the first three months of the year.
“The magnitude of the downward revision to GDP for the second quarter was a surprise, but clearly reaffirmed the fact that the economy remains mired in a protracted period of slower growth,” said Jim Baird, chief investment strategist at Plante Moran Financial Advisors.
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