U.S. economic growth seen slowing in second quarter

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The U.S. economy likely grew at its slowest pace in more than two years in the second quarter as an acceleration in consumer spending was probably offset by weak exports and business investment.

The anticipated moderation in growth will come against the backdrop of rising risks to the economy’s outlook, especially from a trade war between the United States and China as well as slowing growth overseas, which are seen encouraging the Federal Reserve to cut interest rates next Wednesday for the first time in a decade.

With a strong labor market supporting consumer spending, a recession is, however, not on the horizon. The Commerce Department will publish the second-quarter gross domestic product (GDP) report on Friday at 8:30 a.m. EDT (1230 GMT).

“The slowing in the economy spooked the Fed and markets, but the sky is not falling,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “If we do get a recession next year it would be because we shot ourselves in the foot with the trade tensions.”

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