The new estimate overshot even the most optimistic forecasts, with economists on average expecting a 3.2% increase, according to a Bloomberg survey.
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The latest GDP numbers, it said, offer a backward view of the economy, of course, detailing a three-month stretch that ended in June.
But it these latest figures are taken on board there could still be scope for a rise.
These moves, combined with strong gains for US indices yesterday, helped European stocks jump higher in early trading.
The report also showed after-tax corporate profits had rebounded 1.3%, recovering from a 7.9% decline in the first quarter. This suggests that the strong dollar and sluggish growth overseas have significantly hampered export sales overall. Profit data is not inflation adjusted.
He said: “The correction will undoubtedly impact growth in the third quarter, and perhaps the fourth”.
About half the increased growth is expected to have come from greater stockpiling of supplies than the government had initially estimated.
According to the federal report, the “second” estimate for the second quarter is based on more complete data. This was slightly above the consensus estimate of 3.2 percent, and the improvement in economic growth for the quarter was attributed to upward revisions in many categories, but particularly for inventory spending.
The surge in stockpiles is a double-edged sword because, while it boosted growth last quarter, companies will probably need to trim the amount of goods on hand from July through September, leading to cuts in production that will restrain GDP.
Spending on home building and improvements advanced at a 7.8% pace, compared to a previous reading of 6.6% and a first-quarter gain of 10.1%. Construction of residential and nonresidential structures was revised up. The growth in consumption was driven by an increase in durable goods spending, which rose by 8.2 percent in the second quarter. In the first quarter, a trade deficit worsened in part by severe winger weather and West Coast ports labor troubles subtracted 1.92 percentage points from 0.60 percent annualized real growth – the biggest relative hit on record.
The economy grew faster than expected in the second quarter, the Commerce Department said Thursday.
The woes in China, which could weaken US exports, had made a predicted interest rate hike by the Federal Reserve in September less likely.
“The Fed can be confident that the economy is in a healthy state” when it meets next month to discuss whether to raise rock-bottom interest rates for the first time in almost seven years, Mike Jakeman, global analyst for The Economist Intelligence Unit, said in an e-mail. Now, the timing is more in doubt and officials appear cautious.
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U.S. stock markets shot up Thursday after the GDP report and a strong day across global financial markets.
