The nation’s gross domestic product, the broadest measure of economic output, revved up to a 3.9% seasonally adjusted annual growth rate in the second quarter, according to a revised reading from the Commerce Department on Friday, after its paltry 0.6% pace in the first quarter.
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The Commerce Department said the country’s gross domestic product rose at a 3.9% annual pace in the three months from April to June, up from 3.7% reported last month. This morning’s report confirms that the economy grew at a much faster pace in the second quarter than in the first, with strong personal consumption leading the rebound.
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.
Revised construction spending data helped to push up the headline figure, with non-residential fixed investment expanding 4.1 percent in the quarter.
“The survey data point to sustained steady expansion of the USA economy at the end of the third quarter, but various warning lights are now flashing brighter, meaning growth may continue to weaken in coming months”, said Chris Williamson, chief economist at Markit. The figures get revised as the government gets more data on how the economy performed.
Investment on structures, for instance, rose 6.2%, double the earlier estimate. The majority of the spending increase was from state and local governments, which increased spending by 4.3 percent.
The trade deficit was smaller than previously reported, adding 0.23 percentage point to GDP growth. But there is concern that growth slowed in the summer, held back by global headwinds and turbulent financial markets.
BEA will release its advance GDP estimate for the third quarter of 2015 on October 29.
An article in the Wall Street Journal, once again, shows how using the annualized quarter-to-quarter changes in real GDP can give a false impression about how the economy is growing.
Still, this spring’s robust growth suggests the USA economy is well-positioned to weather a rough stretch in the global economy.
Fed Chair Yellen said Thursday that she is ready to raise interest rates this year and intends to let the labor market run hot for a time to heal the lingering scars of the worst recession since the Great Depression.
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At its meeting last week, the Fed chose to hold interest rates near zero for a while longer.
