US growth underwhelmed in the second quarter: GDP was up 1.2% YoY vs. 0.8% in Q1. Over the past year, growth has barely climbed above 1%.

The slowdown observed since the end of 2015 can largely be attributed to company practices: over the last few quarters, business investments have declined and inventory adjustments have weighed on growth. The strength of the dollar has also slowed exports. On the plus side, household spending has been a key source of support, with consumption up 2.7% YoY.

In the coming quarters, growth is expected to pick up again towards 2.5% (chart 1): inventory adjustments are nearing an end; given the rise in oil prices since mid-February, oil industry investments should stop falling (chart 2). Above all, there is every reason for consumption to continue improving at a steady pace: job creations were strong again in July and the wage bill gained over 5% YoY over the last three months.

Growth should average around 1.5% in 2016, driven primarily by household spending (consumption plus housing investment).

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