Wednesday, 13 December, 2017

USA growth in Q2 upgraded to 3%

An auto carrier driver unloads a new Ram pickup truck in Gaithersburg Maryland An auto carrier driver unloads a new Ram pickup truck in Gaithersburg Maryland
Juana Turner | 31 August, 2017, 01:10

USA economic growth in the second quarter was stronger than originally reported, reaching President Donald Trump's target amid robust consumer spending and business investment.

The second quarter growth in 2017 of 3 percent, which includes performance from April, May, and July, more than double the 1.2 percent growth seen in the first quarter of 2017.

President Donald Trump has repeatedly cited as his goal raising U.S. economic growth at an annual rate of 3 percent after eight years in which former President Barack Obama could not reach this benchmark in any quarter.

Trump frequently touts good economic news and accuses the media of failing to cover it.

The revision lifted the annual GDP growth rate from the earlier 2.6% estimate, with growth accelerating from a slow start to the year. Fallout from Hurricane Harvey may also trim third-quarter growth, though reconstruction is likely to help expansion in the following period.

The bureau will release its third estimate for the second quarter of 2017 on September 28.

The more robust second-quarter GDP reading reflected stronger consumer spending and business investment, partly offset by a steeper pullback in government spending.

"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. But net exports are expected to weigh more the growth, with refined product exports hard hit given the outages of Gulf Coast refineries and ports shuttered.

The Bureau of Economic Analysis (BEA) said consumers spent more than previously estimated on items such as housing and utilities, while businesses invested in categories such as equipment and intellectual property.

The GDP and PCE price deflators were slightly changed, rising 1 percent and 0.9 percent annualized in the second quarter.

The Trump administration is targeting tax cuts, deregulation and infrastructure spending to boost growth.

This was the second of three estimates the government will provide for second-quarter growth.

Spending was revised to 3.3% from 2.8%, and consumers account for two-thirds of GDP.

The increase in the estimate was mostly due to personal consumption expenditures and nonresidential fixed investment being larger than previously estimated.

Residential investment fell by 6.5 percent, pulling back from really strong gains in both of the prior releases. Still, the weak inflation figures remain a constraint at this point.

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