Economy grew 3% in 2nd quarter, fastest pace in 2 years

The faster than expected growth was driven by stronger consumption spending and investment.

In the first quarter, real GDP increased 1.2 percent.

Economists surveyed by MarketWatch expected a smaller upward revision in second-quarter GDP to a 2.8% rate.

This morning's report suggests that the USA 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 economy is stronger than you think", said Chris Rupkey, chief financial economist at Mitsubishi UFJ Financial Group in NY.

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The Wallabies again muscled up and Foley had a chance to add another three points at the 30-minute mark but his strike hit the right upright.

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.

Economists are also estimating how Hurricane Harvey could affect third-quarter growth.

"We're still in the slow-lane economy", said Stuart Hoffman, senior economic adviser at PNC Financial Services Group.

The GDP and PCE price deflators were slightly changed, rising 1 percent and 0.9 percent annualized in the second quarter. For the year a whole, I am now predicting real GDP growth of 2.2 percent, with 2.8 percent growth for the current third quarter.

For the second quarter, the government estimated that consumer spending grew at a 3.3% rate, the best showing in a year and up from an initial estimate of 2.8% growth.

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But inflation remained weak in the second quarter, with the Federal Reserve's preferred measure, the personal consumption expenditures price index excluding food and energy, increasing at a 0.9% rate as previously reported.

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

Businesses helped to carry the economy in the second quarter, in part buoyed by a rebound in corporate profits. That was the fastest in almost two years and was an upward revision to the 8.2 percent pace reported last month.

US Treasury Secretary Steven Mnuchin has previously stated that GDP growth of 3 percent would be very achievable for the Trump administration though tax and regulatory reforms.

Nonfarm inventories rose by 0.15%, compared with a drop of 1.59% in the prior quarter, while exports rose by just 0.45%, compared with an increase of 0.85% in the first quarter. Trade added two-tenths of a percentage point to growth.

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Nonresidential fixed investment rose 6.9 percent, revised from an initial increase of 5.2 percent.

(Copyright © 2015. All Rights Reserved.)
 
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