U.S. economy slowed to 1.5% growth rate in Q2; June core inflation at 3.3%

Economic growth was weaker than expected in the second quarter while inflation in June held well above the Federal Reserve’s goal, the Commerce Department reported Thursday.

Gross domestic product, a broad measure of goods and services, increased just 1.5% for the April-through June period, according to Bureau of Labor Statistics numbers adjusted for seasonality and inflation.

Economists surveyed by Dow Jones had been looking for a growth rate of 1.8%, following the 2.1% increase in the first quarter.

A separate report showed that the personal consumption expenditures price index, which is the Federal Reserve’s primary forecasting gauge, fell a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 3.7%. The readings were in line with forecasts.

Excluding food and energy, core PCE posted a monthly increase of 0.1% and an annual level of 3.3%, against respective forecasts for 0.2% and 3.3%.

While the Fed technically uses the headline PCE number as its gauge for setting policy, most officials consider core inflation as a better indicator of longer-run trends.

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