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USA economy grows 2.6% in second quarter

29 July, 2017, 00:57 | Author: Samuel Sharp
  • The tech-heavy Nasdaq's streak of all-time high closes ended Thursday with Apple Google-parent Alphabet and Netflix shares all slumping at least 1.5 percent

Nondurable goods spending was also stronger, up 3.8 percent in the second quarter.

But with wage growth remaining sluggish despite the labor market being near full employment, there are concerns that consumer spending could slow in the third quarter.

Overall, the revisions did not change the U.S. economy's broader picture and confirmed that the current expansion cycle is the slowest on record. Some critics argued that this wasn't the correct time to do so and that the economy couldn't support such monetary policy.

Annual US GDP growth has come in at less than 3 per cent for 11 consecutive years, with the world's biggest economy expanding at a rate of just 1.6 per cent last year, its slowest pace since 2011. But Trump hasn't been able to get his economic agenda through Congress, so those expectations have been dialed back. So far, the impasse in Washington has not hurt either business and consumer confidence.

The mining, oil and gas extraction sector accounted for almost 0.4 percentage points of May's overall economic growth.

"Consumers continue to drive the economy's growth, but firmer business investment is also a plus", says Mark Zandi, chief economist at Moody's Analytics.

But the recent slowdown in Toronto home sales was starting to weigh on economic growth, with activity at offices of real estate agents and brokers tumbling 6.3 per cent.


Previously is had been estimated to be 2.1 percent.

Nonresidential fixed investment, a measure of corporate spending on structures and equipment, climbed at a pace of 5.2 percent in the second quarter, down from a 7.2 percent growth rate in the previous quarter. Growth in the first quarter was revised down to 1.2% from 1.4%.

While businesses probably continued to carefully manage their inventories, they appeared to spend more in some places.

The IMF believed the Trump administration is unlikely to accelerate annual USA economic growth to sustained 3 percent from the newly revised 1.5 percent in 2016, "even with an ideal constellation of pro-growth policies".

The economy grew by 0.6 percent in May from a month earlier, Statistics Canada said on Friday, exceeding economists' forecasts for 0.2 percent. "Weaker housing construction was the only significant drag on growth in the quarter".

The GDP price index rose 1% in 2Q after rising 2.0% prior quarter. Economists had expected an increase of 0.2 per cent, according to Thomson Reuters. "The issue of "residual seasonality" is likely to persist through the upcoming revision".

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