US Economy Grows Most in 4 Years
US economic growth has come in stronger than initially estimated in Q-2, posting its best performance in nearly 4 years, as businesses boosted spending on software and imports declined.
Gross domestic product (GDP) increased at a 4.2% annualized rate, the US Commerce Department said Wednesday in its 2nd estimate of GDP growth for the April-June frame. That was up from the 4.1% pace of expansion it reported in July and was the fastest rate since Q-3 of Y 2014.
Businesses spent more on software than previously estimated in the second quarter and the nation also imported less Crude Oil. Stronger business spending and a smaller import bill offset a small downward revision to consumer spending.
This now put the economy on track to hit The Trump Administration’s target of 3% annual growth.
While consumer spending has remained strong early in Q-3, the housing market has weakened further with home-building rising less than expected in July and sales of new and previously owned homes declining.
The Trump Administration’s “America First” policies have led to an escalation of a trade dispute between the United States and China as well as tit-for-tat tariffs with the EU, Canada and Mexico, are not likely to pose a risk to the economy.
Economists had expected Q-2 GDP growth would be revised down to a 4.0 pace. The economy grew at a 2.2% rate in the January-March frame.
Growth in consumer spending, which accounts for roughly 72% of US economic activity, was lowered to a 3.8% rate in the second quarter instead of the previously reported 4.0% pace. Consumer spending increased at a 0.5% pace in Q-1.
Soybean exports were accelerated in Q-2 to beat Chinese tariffs that took effect in July. Overall exports rose at a 9.1% rate in Q-1 instead of the previously estimated 9.3% pace.
Imports declined at a 0.4% rate, with petroleum accounting for much of the drop. Imports were previously reported to have grown at a 0.5% pace of increase.
That sharply narrowed the trade deficit. Trade added 1.17% to GDP growth in Q-2 rather than the previously reported 1.06%
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