The U.S. economy grew at a 2.5 percent rate in the second quarter of this year, the Commerce Department said Thursday, revising up its initial estimate of a 1.7 percent increase in the nation's economic performance. The result, boosted by a narrowing trade deficit, is better than analysts’ expectation of a 2.2 percent print and raises the possibility that the Federal Reserve will cut the stimulus it provides to the economy.
The revised second-quarter reading more than doubles the pace saw in the first quarter of the year.
“The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures, exports, private inventory investment, nonresidential fixed investment, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased," the Commerce Department said in a statement.
Recent data shows that during the second quarter, exports climbed at their fastest pace in more than two years. Exports increased 8.6 percent in the second quarter, in contrast to a decrease of 1.3 percent in the first. Imports increased 7.0 percent, compared with an increase of 0.6 percent.
Businesses had restocked their shelves at a faster pace in the April-June period than initially estimated. The change in real private inventories added 0.59 percentage point to the second-quarter change in real GDP, after adding 0.93 percentage point to the first-quarter change. Private businesses increased inventories $62.6 billion in the second quarter, following increases of $42.2 billion in the first quarter and $7.3 billion in the fourth.
Government spending fell 0.9 percent instead of 0.4 percent.
Also Thursday, the number of people applying for unemployment benefits fell more than expected last week, to 331,000, in a further sign that the U.S. labor market is improving.
US Q2 GDP Revised Up To 2.5% From 1.7% On Smaller Trade Deficit
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