US economic growth in the 2nd quarter gets revised higher, remains strongest since 2014

  • The US economy grew even faster than previously reported in the second quarter, according to a Commerce Department report released Wednesday.
  • Gross domestic product, the value of every good and service produced domestically, rose at an annual rate of 4.2%, the Commerce Department said, revised up from 4.1% in the advance estimate. It remained the fastest pace of growth in nearly four years.
  • The upward revision indicated that business investments were stronger than initially estimated.

The US economy in the second quarter grew even faster than initially estimated, according to a Commerce Department report released Wednesday.

Gross domestic product, the value of every good and service produced domestically, rose at an annual rate of 4.2%, the Commerce Department said, its fastest growth since the third quarter of 2014. The advance estimate released in July had penciled in growth at 4.1%.

Wednesday’s upward revision, based on more complete data, showed that business investment and inventories contributed more to growth than previously thought.

The April-to-June period was the first full quarter with the tax cuts signed by President Donald Trump in effect. Consumer spending rebounded from the first quarter. As usual, it was the biggest contributor to growth, though the revised data showed it to be slightly weaker than first reported; personal consumption was found to have increased 3.8%, versus 4% prior. Spending on vehicles and healthcare was revised lower.

Expectations for growth in the third quarter vary widely. The Atlanta Federal Reserve branch’s GDPNow forecasting model estimates that the economy will grow at a 4.6% clip in the third quarter. But the New York Fed’s Nowcast model has growth at just 1.96%.

Many economists are doubtful that the economy can sustain a 4% growth rate, partly because of a multiyear slowdown in productivity.

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