The U.S. economy performed better in the second quarter than earlier estimated, growing at a strong 3.9 percent annual rate, the Commerce Department said Friday.
The new data showed economic growth rebounded sharply from weak 0.6 percent annualized growth in the first quarter, fueled by increases in consumer spending, exports, business investment and government expenditures.
The third and final report on total economic output for the April-though-June period was up 0.2 percentage points from last month’s estimate. Analysts had expected no upward revision.
Consumer spending was stronger than initially thought, increasing at a 3.6 percent annualized rate compared with last month’s estimate of 3.1 percent. Consumer spending increased just 1.8 percent in the first quarter.
“The consumer really had a good head of steam in the second quarter,” said Chris Rupkey, chief financial economist at Union Bank in New York. “This is important and is likely to give the economy some backbone going into the financial markets turmoil and stock market gyrations in August.”
But much of the second-quarter growth was the U.S. economy catching up after a slow start to the year.
Economic expansion is expected to slow in the third quarter as the U.S. deals with slowing global economies, particularly in China.
The Federal Reserve Bank of Atlanta, which has a closely watched forecasting model, projects the economy grew at just a 1.4 percent annualized rate from July through September.
For the first half of this year, the economy grew at a 2.25 percent annualized rate. That’s below last year’s 2.4 percent growth.
The Commerce Department is set to release its first estimate of third-quarter growth on Oct. 29. The data will come one day after Federal Reserve policymakers meet to decide whether the economy is strong enough for the first hike in a key interest rate in nearly a decade.
Fed Chair Janet Yellen said Thursday she expected a rate hike this year as long as there are no surprises in the economy.
Central bank officials kept the federal funds rate near zero last month, saying they wanted to take more time to see if financial market turmoil was slowing U.S. economic growth.
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