index2

By Andrea Riquier, Market Watch–

The economy grew less than expected in the second three months of the year, raising questions about its momentum.

Gross domestic product grew at a seasonally adjusted annual rate of 1.2% in the second quarter, the Commerce Department said Friday. Economists surveyed by MarketWatch had expected a 2.6% pace.

That was slightly better than the 0.8% growth notched in the first quarter, a rate previously estimated at 1.1%, but still far from the growth the U.S. has enjoyed in earlier recoveries.

The data was released just two days after the Federal Reserve, more reassured about the economy than they were in June, seemed to open the door to a second interest rate hike in September.

In the second quarter, consumer spending was up 4.2%, but nonresidential fixed investment, or business spending, declined at a 2.2% rate. Consumer spending makes up two-thirds of the economy.

Residential fixed investment, a category that includes home building, fell at a 6.1% pace. Business inventories contracted for the first time since 2011, another sign that businesses are remaining cautious ahead of the November election.