Daily Management Review

Fastest Growth In Over Two Years Reported For U.S. Second-Quarter GDP, Rate Revised Up


08/30/2017




Fastest Growth In Over Two Years Reported For U.S. Second-Quarter GDP, Rate Revised Up
Notching its quickest pace in more than two years, the U.S. economy grew faster than initially thought in the second quarter. And at the start of the third quarter, there are signs that the momentum was sustained.
 
The Commerce Department said in its second estimate on Wednesday, gross domestic product increased at a 3.0 percent annual rate in the April-June period. Robust consumer spending as well as strong business investment was reflected by the upward revision from the 2.6 percent pace reported last month.
 
Following a 1.2 percent pace in the January-March period, growth last quarter was the best since the first quarter of 2015. Second-quarter GDP growth would be raised to a 2.7 percent rate, economists had expected.
 
The economy maintained its stamina early in the third quarter, suggests retail sales and business spending data so far. The growth of Hurricane Harvey, which devastated parts of Texas, saw limited impact according to economists.
 
“The impact on the national economy will be minor,” said Gus Faucher, chief economist at PNC Financial Services in Pittsburgh. “While some output will be lost in the wake of the storm, most of the difference will be made up in the months ahead.”
 
3.4 percent rate is the expected growth estimates for the third quarter. adding 237,000 jobs to their payrolls, private employers ramped up hiring in August, showed other data on Wednesday.
 
The government’s more comprehensive employment report is expected on Friday, which is expected to show solid job gains in August and diminishing labor market slack, and the ADP National Employment Report was released ahead of that report.
 
The economy grew 2.1 percent in the first half of 2017 with GDP quickening in the second quarter. economists said it was unlikely growth this year would breach Republican President Donald Trump’s ambitious 3.0 percent target while that was up from the 1.9 percent reported last month.
 
“Underlying domestic demand in the economy is consistent with near three percent growth but the supply-side of the economy is not capable of delivering such a pace of growth at this point,” said John Ryding, chief economist at RDQ Economics in New York. 
 
infrastructure spending to boost growth, deregulation and tax cuts are being targeted by the Trump administration. However, it is yet to articulate plans for tax reform and infrastructure and has so far failed to pass any economic legislation.
 
Debating and passing of the tax reform legislation before the end of the year by the Republican-controlled U.S. Congress has slim chances. So far, neither business or consumer confidence have been hurt by the political gridlock in Washington.
 
Growing at a 3.3 percent rate, the fastest in a year, and reflecting more spending on motor vehicles, cellphones, housing and utilities than previously estimated, was consumer spending, which makes up more than two-thirds of the U.S. economy.
 
That accounted for the bulk of the pickup in economic growth in the second quarter and was revised up from the 2.8 percent pace reported in July.
 
But reduced saving amid sluggish wage gains was the result of the stronger consumer spending. In the first quarter, the saving rate slipped to 3.7 percent from 3.9 percent. The second-quarter saving rate was previously reported at 3.8 percent.
 
(Souorce:www.reuters.com) 






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