USA second-quarter GDP growth revised up, fastest in over two years

Violet Tucker
August 31, 2017

Economists had forecast a slight increase to 2.7% from 2.6% on the back of stronger consumer spending. That would mark an improvement over a year ago when the economy grew a meagre 1.5 per cent, the poorest showing since 2009 when GDP shrank by 2.9 per cent. The growth rate in the January-March quarter was a lacklustre 1.2%.

Bloomberg was projecting a gain of 2.8% in second-quarter GDP, and this 3.0% actual report was at the top of a 2.5% to 3.0% range in Bloomberg's Econoday forecast.

This morning's report suggests that the US economy is on a more solid footing than previously thought with growth revised up more than expected - albeit on par with our own call.

The revision to GDP is the second strong piece of economic news out on Wednesday.

The US economy grew at its quickest pace for more than two years in the second quarter, reviving prospects of an interest rate hike and delivering a boost for Donald Trump.

Hurricane Harvey's pummeling of major population and production centers in Texas and Louisiana will likely constrain growth in the third quarter.

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"For the first time since the Great Recession ended in mid-2009, the economy is not facing any significant headwinds", Zandi said.

The Commerce Department originally estimated second-quarter growth at 2.6 per cent, but it was revised up to a 3-per-cent pace on Wednesday as more data came in.

Real gross domestic income (GDI) growth for the second quarter came in at 2.9%. Personal consumption expenditures added 2.28 percentage points to top-line growth in the second quarter, up from 1.93 percent in the prior report. American consumers remain in the driver's seat in the current expansion, backed by a strong job market, contained inflation and low borrowing costs.

With GDP quickening in the second quarter, the economy grew 2.1 percent in the first half of 2017. Spending on equipment jumped at a rate of 8.8 percent.

The growth is "impressive given the lack of policy reforms out of Washington D.C.", said Joseph Brusuelas, chief economist at RSM, a tax and consulting firm. -6.8%) as did net exports which totaled -$613.4bn (prev. Trade added two-tenths of a percentage point to growth.

The acceleration in real GDP in the second quarter primarily reflected upturns in private inventory investment and federal government spending and an acceleration in PCE that were partly offset by downturns in residential fixed investment and state and local government spending and a deceleration in exports.

Other reports by Guamnewswatch

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