US economy jumps 4% in second quarter
Print Edition
US economic growth accelerated more than expected in the second quarter and the decline in output in the prior period was less steep than previously reported, bolstering views for a stronger performance in the last six months of the year.
Gross domestic product expanded at a 4.0 percent annual rate as activity picked up broadly after shrinking at a revised 2.1 percent pace in the first quarter, the Commerce Department said yesterday.
That pushed GDP above the economy's potential growth trend, which analysts put somewhere between a 2 percent and 2.5 percent pace. Economists had forecast the economy growing at a 3.0 percent rate in the second quarter after a previously reported 2.9 percent contraction.
A separate report showing private employers added 218,000 jobs to their payrolls last month, a decline from June's hefty gain of 281,000, did little to change perceptions the economy was strengthening.
US stock futures added to gains and yields on US Treasuries rose after the data. The US dollar hit a seven-week high against the yen and an eight-month high against the euro.
The economy grew 0.9 percent in the first half of this year and growth for 2014 as a whole could average above 2 percent. The first quarter contraction, mostly weather related, was the largest in five years.
Employment growth, which has exceeded 200,000 jobs in each of the last five months, and strong readings on the factory and services sectors from the Institute for Supply Management underpin the bullish expectations for the rest of the year.
The government also published revisions to prior GDP data going back to 1999.
It showed the economy performing much stronger in the July to December period of 2013 and for that year as a whole than previously reported.
The GDP data, which was released only hours before Federal Reserve officials conclude a two-day policy meeting, could fuel debate on whether the central bank may need to raise interest rates a bit sooner than had been anticipated.
Consumer spending growth, which accounts for more than two-thirds of US economic activity, accelerated at a 2.5 percent pace, as Americans bought long-lasting manufactured goods.
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