WASHINGTON—The U.S. economy slowed sharply in the summer, reflecting a cutback in businesses’ stockpiling of goods, which offset solid consumer spending. But most economists think growth has been strengthening since the July-September quarter ended.
The Commerce Department said Thursday that the economy, as measured by the gross domestic product, grew at a tepid annual rate of 1.5 percent in the July-September quarter, far below the 3.9 percent rate of the previous quarter.
The biggest reason was a push by businesses to shrink unwanted stockpiles, which slashed 1.4 percentage points from quarterly growth but is expected to be only temporary. Encouragingly for the economy, consumer spending remained solid over the summer: It rose at a 3.2 percent annual rate, down only slightly from the previous quarter.
And most analysts have said they think businesses are stepping up their stockpiling this quarter in response to the continued gains in consumer spending. Many predict that growth in the October-December quarter will rebound to around a 2.5 percent annual rate.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said that excluding the drag from scaled-back inventory rebuilding, Thursday’s report was “solid.” Noting the consistent strength in consumer spending, Shepherdson said he thinks the current quarter’s annual growth rate could reach 3 percent.
For all of 2015, the economy is expected to expand around 2.3 percent, near last year’s modest 2.4 percent, despite persistent economic weakness around the world.
Still, last quarter’s slump marked the latest slide for an economy that began 2015 on a rocky note as a severe winter and West Coast port disruptions essentially stalled growth. The economy rebounded in the April-June quarter before weakening again in the summer. The report Thursday was the government’s first of three estimates of growth for the third quarter.
