Corporate America is slacking off.
New numbers on the U.S. economy—the world's biggest—show it continues to grow at a less-than-sizzling pace. The data show the broadest measure of the economy, GDP, expanded at a 1.1 percent annual pace during the second quarter. (That's April, May and June.) Not terrible. But not amazing.
But the U.S. wouldn't have been able to manage even that level of growth without a surprising spurt of spending from shoppers. The government's measure of personal spending rose at a 4.4 percent clip during the second quarter. That's the second fastest reading since the Great Recession ended. Spending on cars and recreational vehicles was a big contributor, as the improvement in the US labor market—unemployment is now at 4.9 percent—has people feeling more comfortable shelling out for that snowmobile.
In fact, the economy only expanded because of shoppers. Companies, by and large, were a drag on GDP as they continued a well-established pattern of stingy investment in the technology, equipment and buildings the economy needs to keep growing.
A key gauge of business spending declined at a 0.9% rate during the second quarter. That was the third straight decline in investment, something the US hasn't seen since the Great Recession.
Of course, companies need feel good about the stability of the economy before they drop tons of cash on investments. Ideally the good vibes from consumers will eventually spill over and start coaxing corporate types to join the spending party. If that happens—perhaps after the noisy presidential election season ends—look out. The US economy will really get rolling.