The United States economy kicked into higher gear last quarter, the Commerce Department said on Wednesday, revising its initial estimate for growth upward to 3 percent — the fastest pace in two years.þþThe revised figure is still well below President Trump’s target of 4 percent, but it is a major improvement from the government’s initial reading last month of 2.6 percent growth.þþIt is also significantly better than the economy’s lackluster pace in the first quarter. The improvement was spurred in large part by strong consumer spending, with purchases of durable goods like automobiles and appliances rising strongly.þþMost economists are looking for the economy to expand at a rate of roughly 3 percent in the second half of the year. That pace should be strong enough to keep job growth and wages on track for further improvement, while keeping the threat of inflation modest for now.þþIf the economy sustains the current pace of expansion, it would be a significant uptick from the 2 percent growth rate that has mostly prevailed since the current recovery began eight years ago.þþWhile a difference of a single percentage point may not sound like much, in a $19 trillion economy, the stakes are huge. The acceleration could also help lift wage growth, which has been frustratingly slow for years despite steady hiring, a surging stock market and rising home prices.þþThe new second-quarter estimate “points to solid momentum in domestic demand,” Barclays said in a note to clients immediately after the figure was released. “Altogether, the data show more momentum in the domestic economy.”þþPrivate-sector estimates of third-quarter growth have also inched higher lately. Macroeconomic Advisers now forecasts a 3.4 percent expansion rate for the current quarter, up from the 2.9 percent figure it forecast earlier this month.þþIncreases in consumer spending and business investment powered nearly all of the revision issued on Wednesday. Factors like net exports and residential investment barely changed, while government spending added only 0.1 percentage point.þþThe Commerce Department offers three estimates of growth as more data becomes available, with the third and final figure for second-quarter economic activity to be released on Sept. 28.þþ
Source: NY Times
