The economy rebounded last quarter after growing at a 0.6% pace from January through March amid harsh winter weather, a labor dispute at West Coast ports and a pullback in energy-industry investment after the plunge in oil prices.
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Personal spending was stronger than thought in the second quarter, helping to drive real GDP to a very solid 3.9% annualized rate.
A revised construction spending data proved a leading factor in providing push to headline figure, with 4.1% expansion in non-residential fixed investment in the quarter.
Real gross domestic product – the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes – increased at an annual rate of 3.9 percent in the second quarter of 2015, according to the “third” estimate released by the Bureau of Economic Analysis. Economists at Macroeconomic Advisors are forecasting GDP growth of 2.7 percent in the October-December period.
Overall, net exports contributed 0.2 percent to GDP, compared to a 1.9 percent drag in the first quarter. A measure of private inventories leveled off in the second quarter, suggesting firms have a backlog of products stocked on their shelves.
Investment on structures, for instance, rose 6.2%, double the earlier estimate.
For the first half of this year, the economy grew at a 2.25% annualized rate.
But Jim Baird, chief investment officer for Plante Moran Financial Advisors, believes investors are already focusing on the initial print for Q3, which is expected to show slower growth.
The problem with this is that with interest rates so low, the Federal Reserve will have little or no room, other than further quantitative easing, to attempt to stimulate the economy with traditional monetary tools.
The US Federal Reserve last week held off on hiking rates, but chairwoman Janet Yellen kept the door open to an increase this year in a speech on Thursday night, as long as inflation remains stable and growth is strong enough to boost employment.
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The University of Michigan Survey of Consumer’s Index of Consumer Sentiment fell 5.1% to 84.6 this month. Attention has already turned to the third quarter though, with economists expecting growth to fall back in line with the 2.5% trend growth that has characterized the USA economy in the past several years.
