GDP Growth Revised Upward to 3% for Q2

GDP Growth Revised Upward to 3% for Q2

The revisions indicate greater momentum going into the second half of 2017, as well as showing that growth in GDP - the value of all goods and services produced - may be broadening beyond household spending.

Many economists had been forecasting growth in the current July-September quarter would be around 3%.

On the stump for an overhaul of the nation's tax system, President Donald Trump on Wednesday said that cutting taxes would "bring back Main Street" and spur the US economy to a level of growth not seen since the Great Recession.

The 3% growth rate in the second quarter marked a rebound from 1.2% growth in the first three months of the year. Personal consumption expenditures added 2.28 percentage points to top-line growth in the second quarter, up from 1.93 percent in the prior report.

The US economy expanded faster than first estimated in the second quarter, according to a revision issued on Wednesday by the Commerce Department.

The report said consumer spending on wireless phones and their associated services pushed intellectual property investment up 4.9 percent. This came in contrast to a decrease of $46.2bn in the January-March period. However, the current devastation in Southeast Texas is likely to hit growth in the third quarter, with economic activity substantially disrupted in the Houston, Victoria, and Corpus Christi metro areas.

Meanwhile separate figures released by payrolls provider ADP showed the United States private sector added 237,000 jobs in August, massively overshooting analyst predictions of less than 185,000 and adding further support to the dollar.

Spending by governments, which had grown 0.7% in the initial estimate, was revised to a decline at a 0.3% rate. Even with the upward revision, the weak start to the year means that growth over the past six months has averaged 2.1%, the same modest pace seen for the recovery that began in mid-2009.

Despite the acceleration in consumer spending, inflation remained benign in the second quarter.

Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent (revised) in the first.

Last quarter's rise was the slowest in more than two years and followed a 1.8 percent rate of increase in the first quarter.

Yet there is little sign of this denting business or consumer confidence as the GDP figures, added to retail sales, business spending and jobs survey data for the early part of the third quarter, painting a positive picture. Treasury Secretary Steven Mnuchin has said it will take up to two years for the economy to sustain this pace, while some economists have said the target is too high.

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