US Q2 GDP Reported at 2.6%, Consumer Spending Growth Strengthens

Saturday, 29 Jul, 2017

Gross domestic product, a broad measure of goods and services produced in the USA, rose at a 2.6% annual rate in the April to June period, the Commerce Department said Friday.

The economy grew 1.5% a year ago, revised downwards from the 1.6% the government estimated earlier, making it the slowest growth rate since the 2007-09 recession triggered by the global financial crisis.

The International Monetary Fund (IMF) also said on Thursday that it expected the USA economy to grow at 2.1 percent this year and next, supported by solid consumption growth and a rebound in investment. Growth in 2015 is now 2.9 percent, up from 2.6 percent.

"I feel much more confident that we're going to stick the landing on tax reform because we have now said we have consensus, here's the framework, let's go get it done", Ryan said on Fox Business.

The economy performed slightly better over the past three years than previously believed, thanks in part to a boost from how the government accounts for gasoline sales. Average GDP growth during the period through the end of a year ago is now at 2.2 percent, up from 2.1 percent previously.

President Trump has pledged to pursue policies to boost the USA economy, including cutting corporate and individual taxes, but has faced a Washington impasse.

The BEA also released its annual update of GDP figures using "newly available and revised source data" for the 2014 - 2016 period.

While the 2.6 percent growth in the second quarter signals a rebound from the previous quarter, it still falls short of the 3 percent to 4 percent growth the Trump administration has been targeting. Economists polled by MarketWatch had forecast a 2.8% increase. In addition, it revised first quarter growth down from 1.4 percent to 1.2 percent.

Meanwhile, the increase in GDP was limited by negative contributions from private residential fixed investment, private inventory investment, and state and local government spending.

The mining, oil and gas extraction sector accounted for almost 0.4 percentage points of May's overall economic growth. Inflation as measured by the PCE price index increased at a 0.3% annual rate. Exports rose twice as fast as imports: 4.2% vs. 2.1%.