Economy rebounds strongly in 2nd quarter, expands at 4% annual rate

  • By Jim Puzzanghera Los Angeles Times
  • Wednesday, July 30, 2014 7:35am
  • Business

The U.S. economy rebounded strongly in the second quarter after a winter contraction, expanding at a 4 percent annual rate, the Commerce Department said Wednesday.

Analysts had projected the nation’s total economic output, or gross domestic product, to expand at a 3.1 percent in the second quarter. But the economy performed better than expected, with growth in the April-May period the best since the third quarter of last year.

“Some of the past quarter’s growth performance reflects a catch-up from the dismal first-quarter performance,” said Gad Levanon, director of macroeconomic and labor market research at the Conference Board.

“But this stellar growth figure also suggests that the economy has gained some momentum and could hold on to this newfound dynamism through the second half of 2014,” he said.

Growth was boosted by a jump in consumer spending, which rose 2.5 percent, compared with 1.2 percent in the first quarter, the Commerce Department said.

Business investment surged 5.5 percent in the second quarter after a 1.6 percent increase the previous quarter. Exports jumped 9.5 percent in the second quarter after decreasing 9.2 percent in the first quarter.

The 4 percent annual growth in the second quarter is the Commerce Department’s first estimate and could change with more data.

Bitter cold and heavy snow in much of the nation caused the economy to contract at a 2.1 percent annual rate in the first quarter. The Commerce Department revised the figure on Thursday after reporting a 2.9 percent contraction last month.

That was just the second quarter since the Great Recession ended five years ago that the economy shrank. The economy had expanded at a 2.8 percent annual rate in the fourth quarter.

Economists had attributed the first-quarter contraction largely to the bad weather and expected a turnaround would begin in the spring.

Last week, the International Monetary Fund projected that the U.S. economy would expand at a 3 percent to 3.5 percent annual rate the rest of the year.

But the first quarter’s poor performance still would drag down overall growth for the year to a disappointing 1.7 percent, the worst since the recession ended in 2009, the IMF said.

Federal Reserve officials will update their economic forecasts Wednesday at the end of their policymaking meeting. In June, they had expected the economy to expand 2.1 percent to 2.3 percent this year.

The second-quarter growth data should give Fed policymakers confidence to continue reducing their monthly bond-buying program, a move they are expected to announce Wednesday.

Also Wednesday, payroll firm Automatic Data Processing said the private sector added 218,000 net new jobs in July. That was down from 281,000 in June and and below analyst estimates, but still represents strong growth.

On Friday, the Labor Department is expected to report that the overall U.S. economy added about 233,000 net new jobs in July.

Such growth would be down from 288,000 net new jobs in June, but it would mark the sixth straight month the economy has added more than 200,000 new jobs. The last time that happened was in 1997.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.