GDP: US Economic Growth in 2Q Revised Higher to Solid 3%

The Globe and Mail

The Commerce Department Wednesday said gross domestic product increased at a 3 percent annual rate in the quarter from April to June. "We had a major debt deleveraging after the housing collapse, then we had the European debt crisis and that was followed by a collapse in global energy and other commodity prices and then the Chinese economy stumbled", Zandi said.

The chief driver of second-quarter strength was consumer spending.

The rate surpassed analyst expectations, which called for an increase of 2.7 percent.

The more robust second-quarter GDP reading reflected stronger consumer spending and business investment, partly offset by a steeper pullback in government spending.

United States growth figures are published at an annualised rate - showing how the economy would have performed if the improvement over one quarter were extended over a year.

The second quarter showed a rebound in the economy from the January-March period, when growth at an annual rate was 1.2%.

The government provides three estimates each quarter for GDP, the economy's total output of goods and services.

"We don't expect these to show much progress until later in the year and consequently feel that Fed is unlikely to act until at least December", noted TD Economics. Trump's challenge is to make strong growth the norm, not a blip for a quarter or two.

The upward revision was mainly seen in intellectual property that rose 4.9 percent from the initial estimate of 1.4 percent and structures that rose 6.2 percent from 4.9 percent, while equipment spending was upwardly revised a bit to 8.8 percent. "That's some numbers. And I happen to be one that thinks we can go much higher than three percent".

The saving rate also slipped to 3.7% from 3.9% in the first quarter. The average of real GDP and real GDI, which is a supplemental measure of USA economic activity that equally weights GDP and GDI, gained 3.0% in the 2Q, compared with an increase of 2.0% in the first. Increases in personal consumption expenditures (PCE) and in nonresidential fixed investment were larger than previously estimated. That would mark an improvement over a year ago when the economy grew a meager 1.5 percent, the poorest showing since 2009 when GDP shrank by 2.9 percent. Factors like net exports and residential investment barely changed, while government spending added only 0.1 percentage point.

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