USA growth upgraded to 3 percent in second quarter
- Author: Ronnie Bowen Aug 31, 2017,
Aug 31, 2017, 1:21
In the first quarter, real GDP increased 1.2 percent.The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. That was the fastest in almost two years and was an upward revision to the 8.2 percent pace reported last month.
Nonfarm inventories rose by 0.15%, compared with a drop of 1.59% in the prior quarter, while exports rose by just 0.45%, compared with an increase of 0.85% in the first quarter.
Profits from current production - that is corporate profits adjusted for the value of unsold inventory and capital consumption - increased by $26.8bn in the second quarter.
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.
Trump said if the economy is able to sustain growth at a 3 per cent rate, it would create 12 million new jobs and $10 trillion in new economic activity over the next decade. While that was up from the 1.9 percent reported last month, economists said it was unlikely growth this year would breach Republican President Donald Trump's ambitious 3.0 percent target. This was above the consensus expectation of a rise of 2.7 percent.
"The economy is stronger than you think", said Chris Rupkey, chief financial economist at Mitsubishi UFJ Financial Group in NY.
The US economy expanded at a rate of 3 percent in the second quarter of 2017, which is faster that has been predicted, the Department of Commerce said in a news release on Wednesday.
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The US currency has been under pressure recently after tensions with North Korea, fears over the economic impact of storm Harvey, and a threat by Mr Trump to shut down the government as part of a stand-off with Congress.
Zandi forecasts that growth in 2018 will be an even stronger 2.8%.
The Trump administration has pledged to return the world's largest economy to sustained annual growth of three percent or more by slashing taxes and regulations while boosting trade.
USA growth figures are published at an annualised rate - showing how the economy would have performed if the improvement over one quarter were extended over a year.
"For the first time since the Great Recession ended in mid-2009, the economy is not facing any significant headwinds", Zandi said. "We had a major debt deleveraging after the housing collapse, then we had the European debt crisis and that was followed by a collapse in global energy and other commodity prices and then the Chinese economy stumbled", Zandi said.
It is not unusual for the US economy to see a "spring bounce", where growth picks up sharply after the winter months as people head to the store or take expensive vacations.