According to data released by the Commerce Department on Friday, the USA economy saw a higher than expected expansion in the second quarter. This was higher that the 3.7% pace that was reported last month.
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Curtin said the true significance of these findings is not the diminished economic prospects, but that consumers now believe that global economic trends can directly influence their own job and wage prospects as well as indirectly via financial markets.
The upward revision was driven mainly by a bigger pickup in consumer spending and business investment in commercial and residential construction.
The economy was even healthier than originally thought in the second quarter, data out Friday showed.
The Commerce Department has been steadily raising its estimate for the second quarter. The new measures of average GDI and GDP was less impressive at +2.3% vs. +2.1% prior.
What about the monthly figures for industrial production in July and August?
The revisions to Q2 growth also highlighted a smaller than estimated accumulation of inventories. The median projection in a Bloomberg survey called for 86.5, compared with a preliminary September reading of 85.7. Profits after tax with inventory valuation and capital consumption adjustments showed a 2.6 percent rebound from a slump in late 2014 and early 2015.
Businesses also invested more in structures such as office buildings and plants than the government initially reported. And spending for home construction climbed 9.3% instead of 7.8%.
Although the latest estimate covers the period from April to June, it suggests the economy is on track for solid if unspectacular growth this year.
Next month, the government will release its first estimate of economic growth for the third quarter.
However, this is not what the year-over-year figures show.
Stephen Stanley, chief economist at Amhert Pierpont Securities, wrote in a note to clients he expected inventory investment to slow in the third quarter “subtracting about a full percentage point from Q3 GDP”.
Last week the US Federal Reserve held off from hiking rates but chair Janet Yellen kept the door open on a rise this year.
“The overall economy has been expanding modestly faster than its productive potential”, she said.
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Policy makers are “monitoring developments overseas, but we do not now anticipate that the effects of these recent developments on the USA economy will prove to be large enough to have a significant effect on the path for policy”, she said in a speech in Amherst, Massachusetts.
