USA second-quarter GDP growth revised up, fastest in over two years
- Author: Rita Burton Aug 31, 2017,
Aug 31, 2017, 1:05
With this second estimate for the second quarter, the general picture of economic growth remains the same, the BEA says.
Quarterly growth, however, can vary widely from the annual average; GDP growth exceeded 3 percent in five quarters since mid-2013, but the overall growth rate each year was ultimately tempered by lax growth in other quarters.
GDP increased by about 1.5% in 2016 in the U.S. and by 2.9% in 2015, according to the BEA.
It also represents a significant bounce from the anemic 1.2 percent growth rate reported for the first quarter of 2017.
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.
During the 2016 election, then-presidential candidate Trump pledged to bring manufacturing sector jobs back to the United States and focus on improving the country's economy.
The upward revision to consumer spending reflected upward revisions to exports, federal government spending and private inventory investment.
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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. Economists saw a limited impact on growth from Hurricane Harvey, which devastated parts of Texas.
The dollar firmed against a basket of currencies, while prices for U.S. Treasuries fell. "On a yearly basis, growth of 2.2% is in line with the post-recession norm, and, importantly, still above potential, implying further downward pressure on the jobless rate".
President Donald Trump is relying on growth above 3% to generate enough revenue for the government to pay for tax cuts and more infrastructure spending. This raises doubts on the sustainability of the robust pace of consumer spending.
For the second quarter, the government estimated that consumer spending grew at a 3.3 per cent rate, the best showing in a year and up from an initial estimate of 2.8 per cent growth. Still, the subdued inflation figures continue to be a constraint at this point.
The increase in the estimate was mostly due to personal consumption expenditures and nonresidential fixed investment being larger than previously estimated.
Imports, which are a subtraction in the calculation of GDP, increased.
Consumer spending was the main engine for the strength in the second quarter, rising a revised 3.3% in the second quarter.