Heavy Duty Trucking Logo
MenuMENU
SearchSEARCH

Economic Watch: New GDP Reading Disappoints, Consumer Sentiment Falls

Hopes that the American economy picked up a good head of steam in the second quarter of the year were quickly dashed on Friday following numbers being issued by the U.S. Commerce Department.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
July 29, 2016
Economic Watch: New GDP Reading Disappoints, Consumer Sentiment Falls

 

4 min to read


Hopes that the American economy picked up a good head of steam in the second quarter of the year were quickly dashed on Friday following numbers being issued by the U.S. Commerce Department.

The nation’s gross domestic product, the widest measure of economic activity, increased at an annual rate of 1.2% in the April-June period. In this advance estimate, the first of three, this compares to a downwardly revised 0.8% rate in the first quarter of the year and is well below what many economists were forecasting.

Ad Loading...

Growth in the first quarter GDP was estimated to be at rate of 1.1% a month earlier, while the department also revised down the fourth quarter rate from 1.4% to 0.9%. Part of the reason for the decline in the earlier figures is the federal government revised how it measures economic growth, affecting reports going back to 2013.

The disappointing headline reading was despite an as-expected jump in consumer spending that more than doubled the pace of growth in the prior quarter, rising 4.2%, according to RBC Economics. Strength in the household sector was not reflected in residential investment this time around, which fell 6.1% following sizeable gains over the last two years.

Nonresidential investment was also weak, declining for a third consecutive quarter, falling 2.3%, to extend the longest losing streak since the recession. Government spending declined for the first time in more than a year.

Ad Loading...

RBC also noted exports rose 1.4% following three consecutive quarterly declines amid an increase in the value of the U.S. dollar and slower global growth. With imports edging lower, net trade added 0.2 percentage points to growth, however, inventories continued to subtract from growth, with the drag accelerating to 1.2 percentage points in the second quarter.

"The strengthening in consumer spending is encouraging, and we look for households to continue to contribute to growth amid an improving labor market and low interest rates,” said Josh Nye, economist at RBC Economics Research. “However, the pullback in business investment, which has not been limited to the energy sector, remains a concern."

He noted these two themes were reflected in the Federal Reserves’ latest policy statement, although their tone on overall activity painted a better picture than today’s growth numbers indicate. 

Adding to the disappointment to the latest GDP reading is that housing has been strong, with many considering it one of the brightest spots of the post-recession economy. And while the latest indicators show manufacturing remains down, it has moved higher from being in negative territory earlier this year.

According to the Wall Street Journal, since the “Great Recession” ended seven years ago, the ecomic expansion has failed to achieve the significant growth seen in past recoveries, with the average annual growth rate during the current business cycle being 2.1%, the weakest of any expansion since at least 1949.

Ad Loading...

Consumer Sentiment Declines But Still Strong

Also on Friday, a final reading on consumer sentiment was also released showing it turned slightly slower this month.

The University of Michigan Survey of Consumers fell below the June level mainly due to increased concerns about economic prospects among upper income households.

The Consumer Sentiment Index posted declines of 3.7% and 3.3%, from June and year-over-year, respectively.

“The Brexit vote was spontaneously mentioned by record numbers of households with incomes in the top third, more than twice as frequently as among households with incomes in the bottom two-thirds,” said Surveys of Consumers chief economist Richard Curtin. “Given the prompt rebound in stock prices as well as the tiny direct impact on U.S. trade, it is surprising that concerns about Brexit remained nearly as high in late July as immediately following the Brexit vote.”

The survey’s measures of consumer feeling about current economic conditions fell from June, but are higher than they were this time a year ago. However, the measure of their expectations fell this month from both June and July 2015.

Ad Loading...

“While concerns about Brexit are likely to quickly recede, weaker prospects for the economy are likely to remain, Curtin said. “Uncertainties surrounding global economic prospects and the presidential election will keep consumers more cautious in their expectations for future economic growth.”

More Fleet Management

The Cyber Stop column header with photo of a smiling driver in truck with a laptop and a wi-fi icon
Fleet ManagementAugust 21, 2026

Public Wi-Fi Cybersecurity Risks: How Truck Drivers and Fleets Can Protect Their Data

Public Wi-Fi can expose truck drivers and fleets to credential theft, malware, and other cyber threats. Here’s how to reduce the risk on the road.

Read More →
Woman in white blazer superimposed on background showing a row of Fraley & Schilling truck, plus the HDT Truck Fleet Innovators 2026 logo
Fleet Managementby Deborah LockridgeAugust 19, 2026

For Nicky Cupp, Fleet Innovation Starts With Frustration

HDT Truck Fleet Innovator Nicky Cupp turns everyday pain points at Fraley & Schilling into opportunities for better technology and smarter processes.

Read More →
Headshot of Adam Buttgenbach with a Pepsi-branded Tesla Semi in the background
Fleet Managementby Deborah LockridgeAugust 18, 2026

Adam Buttgenbach’s Approach to Electric Trucks: Start With Where They Fit

HDT Truck Fleet Innovator Adam Buttgenbach helped PepsiCo build one of North America’s largest EV fleets by focusing on where electric trucks make operational sense.

Read More →
Ad Loading...
Deen Albert in collared shirt superimposed on background showing a Grand Island Express blue tractor pulling a trailer, plus the HDT Truck Fleet Innovators 2026 logo
Fleet Managementby Deborah LockridgeAugust 17, 2026

Deen Albert: Let Automation Do the Math, People Make the Decisions

HDT Truck Fleet Innovator Deen Albert makes sure people are still at the heart of operations at Grand Island Express, even while adopting artificial intelligence tools. AI-assisted dispatch helped boost revenue 25% with the same number of trucks.

Read More →
Illustration of computer screen with Trimble Arc Agent screen
Fleet Managementby Deborah LockridgeAugust 14, 2026

Trimble’s New AI Agent Takes Aim at Fleet Back-Office Busywork

Arc Agent works across Trimble TMS products to automate repetitive tasks such as freight orders, maintenance, invoices, fuel costs and more.

Read More →
Photos of three men and two women with HDT Truck Fleet Innovators 2026 logo
Fleet ManagementCover Storyby Deborah LockridgeAugust 13, 2026

How HDT’s 2026 Truck Fleet Innovators Are Rethinking Fleet Operations

Meet five trucking leaders who are challenging assumptions, solving operational problems, and putting innovative ideas to work.

Read More →
Ad Loading...
Graph showing how contract rates and spot rates converged in July
Fleet Managementby StaffAugust 12, 2026

Tight Trucking Capacity Pushes Rates Higher Even as Freight Volumes Fall

“Spot rates moving ahead of contract rates have historically signaled a tightening market, but we haven’t seen a capacity-driven market quite like this one,” said DAT's Dean Croke.

Read More →
Line graph showing container import volumes
Fleet Managementby StaffAugust 7, 2026

Import Cargo’s Early Peak Season is Winding Down

There was an early start to peak season this year at the nation's gateway ports, as retailers brought in merchandise ahead of tariff changes in late July and responded to other supply chain uncertainties,

Read More →
Blue infographic with graphs illustrating cargo theft trends in the second quarter of 2026
Fleet Managementby Deborah LockridgeAugust 6, 2026

Fewer Cargo Thefts, Bigger Losses: Criminals Target Higher-Value Loads

CargoNet says organized theft rings are stealing fewer shipments but choosing more valuable freight, including metals and technology, resulting in record losses.

Read More →
Ad Loading...
Illustration of a chalkboard with a hand drawing an arrow curving away from a partially erased straight arrow with the words "Embracing Change," the Heavy Duty Trucking Logo and the "cover feature" graphic.
Fleet Managementby Deborah LockridgeAugust 1, 2026

How Innovative Trucking Leaders Turn Change Into an Advantage

As the pace of change accelerates in trucking, the fleets that adapt best have more than the latest technology. They have cultures that embrace improvement.

Read More →