U.S. business investment downturn could pressure slowing economy

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U.S. business investment contracted more sharply than previously estimated in th...

FILE PHOTO: Lower Manhattan including the financial district is pictured from the Manhattan borough of New York, U.S. June 1, 2016. REUTERS/Carlo AllegriWASHINGTON - U.S. business investment contracted more sharply than previously estimated in the second quarter and corporate profit growth was tepid, casting a shadow on an economy that is being stalked by financial market fears of a recession.

Powell said U.S. central bank contacts had told policymakers that trade policy uncertainty “has discouraged them from investing in their businesses.” The Fed cut interest rates again last Wednesday after lowering borrowing costs in July for the first time since 2008. Business investment was previously estimated to have dropped at a 0.6% pace. It was pulled down by an 11.1% rate of decline in spending on structures, which reflected decreases in the categories of commercial and healthcare, and mining exploration, shafts and wells.

The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, rose at a 1.9% rate last quarter, rather than the 2.1% pace estimated last month. That was a slowdown from a 3.2% pace of growth in the first three months of the year.U.S.

Consumer spending is being driven by the lowest unemployment rate in nearly 50 years. A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 213,000 for the week ended Sept. 21. There were minor revisions to trade and inventory investment estimates. Trade cut 0.68 percentage point from GDP growth last quarter and could remain a drag on GDP growth in the third quarter. A third report from the Commerce Department on Thursday showed the goods trade deficit rose 0.5% to $72.8 billion in August amid a rise in imports and small gain in exports.

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