United States growth in Q2 upgraded to 3%

Chelsea West
August 31, 2017

That was revised up from the 2.8 percent pace reported in July and accounted for the bulk of the pickup in economic growth in the second quarter.

Real consumer spending was revised 0.5% higher to 3.3%, fueled in large part by stronger than expected USA retail sales.

For the second quarter, the government estimated that consumer spending grew at a 3.3 per cent rate, the best showing in a year and up from an initial estimate of 2.8 per cent growth.

Consumer spending, biggest part of the economy, grew 3.3 percent (estimated 3 percent), most since second quarter of 2016 and revised from 2.8 percent.

The increase in real GDP in the second quarter reflected positive contributions from PCE, nonresidential fixed investment, exports, federal government spending, and private inventory investment that were partly offset by negative contributions from residential fixed investment and state and local government spending.

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Economists are also estimating how Hurricane Harvey could affect third-quarter growth. Payroll processor ADP said USA employers added a seasonally adjusted 237,000 jobs in August, easily topping the Econoday consensus forecast for 185,000. American consumers remain in the driver's seat in the current expansion, backed by a strong job market, contained inflation and low borrowing costs.

"The ADP overshoot in August compared to our payroll model suggests we should move our forecast for Friday up to about 220K from 200K", said Ian Shepherdson, Chief economist at Pantheon Macroeconomics. The saving rate slipped to 3.7 percent from 3.9 percent in the first quarter. Trump submitted a budget to Congress in May that was based on achieving growth rates in coming years of 3 percent on a sustained basis.

The revisions bring the pace of first-half growth to 2.1 percent, about equal to the average rate since the last recession ended in 2009. Most promisingly, equipment spending soared in the latest data to its fastest pace since the third quarter of 2015, up 8.8 percent, with 6.2 percent growth in structures spending. Economists had forecast a slight increase to 2.7% from 2.6% on the back of stronger consumer spending.

The rate surpassed analysts expectations, which called for an increase of 2.7 per cent.

US Treasury Secretary Steven Mnuchin has previously stated that GDP growth of 3 percent would be very achievable for the Trump administration though tax and regulatory reforms.

Other reports by TheSundaySentinel

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