U.S. economic growth slowed dramatically as consumers turned cautious in the April-June quarter. But economists said not to worry it was a temporary respite that should help keep inflation at bay.
The gross domestic product - the sum of all goods and services produced within U.S. borders - expanded at a mild 2.2 percent seasonally adjusted annual rate, the Commerce Department said Thursday.
That was down from the robust 4.9 percent rate during the first three months of this year and 4.3 percent in the final quarter of last year.
“This quarter is something like the love scene in an action picture. It slows down the pace for a few moments so the audience can catch its breath,” said economist Everett M. Ehrlich of ESC Co. in Washington.
Meanwhile, the job market is booming. Applications for unemployment benefits fell to a 23-year low of 277,000 last week, down 22,000 from the previous week, the Labor Department said.
Analysts believe plentiful jobs and rising incomes are propelling faster growth in the current quarter, around a 3 percent rate.
But they don’t know yet if that will be strong enough to trigger inflation-fighting interest-rate increases from the Federal Reserve.