US Economy Grew Faster in Q2 than Previously Estimated

US economy

The US economy grew stronger than expected in the second quarter, driven by dynamic household consumption, according to the third and final estimate of the Department of Commerce released Friday.

Between April and June, US gross domestic product (GDP) grew by 3.9% in annualized and seasonally adjusted data, marking a rebound after a weak first quarter (+ 0.6%) due to the winter.

The acceleration in Q2 was due to an increase in household spending, a rebound in exports, more dynamic investment by companies and the recovery of state and local governments spending. Imports, which weigh on GDP, have also slowed down their increase.

Consumers, traditional engine of the US economy, have once again significantly driven growth. Consumer spending which accounts for two-thirds of US GDP showed a 3.6% increase, the largest since the last quarter of 2014.

It is also 0.5 percentage point higher than the previous estimate and double of the growth rate of the first quarter (1.8%).

US GDP stands now at 17.914 billion. $ 12.228 billion consist of consumer spending, with two thirds of that spending going into services.

More good news, business investment also accelerated sharply, with a 4.1% growth rate against 3.2% for the second estimate and only 1.6% for the first quarter.

Corporate profits grew by 3.5% to 2.083 billion dollars. After being affected earlier this year by the appreciation of the dollar and the impact of social conflicts in the ports of the West Coast (-6%), exports regained color in spring, rising by 5.1% . Imports grew by 3% after 7.1% the previous quarter.

Public spending recorded its largest increase in five years to 2.6%, mainly due to the investments by state and local authorities (+ 4.3%) while expenses of the federal state have stagnated.

The government will release its first estimate for the third quarter growth on October 29, a day which will coincide with a meeting of the Monetary Committee of the Federal Reserve on interest rates.

Most economists are betting on growth of around 2.5% for 2015 against 2.4% in 2014.

You Might Want to Read