USA annual growth rate revised up to 3% in second quarter
- Author: Wendy Palmer Aug 31, 2017,
Aug 31, 2017, 1:21
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 USA economy to a level of growth not seen since the Great Recession.
Gross domestic product rose at a 3 percent annualized rate from the prior quarter (estimated 2.7 percent); revised from initial estimate of 2.6 percent.
This came in much higher than the 185,000 forecast by analysts, and upped the ante on expectations for Friday's report, where forecasts now sit at 180,000 - which is close to the average monthly increase this year.
The growth is "impressive given the lack of policy reforms out of Washington D.C.", said Joseph Brusuelas, chief economist at RSM, a tax and consulting firm. For the year a whole, I am now predicting real GDP growth of 2.2 percent, with 2.8 percent growth for the current third quarter.
The saving rate also slipped to 3.7% from 3.9% in the first quarter.
The second-quarter GDP estimate is the best showing since a 3.2% gain in the first quarter of 2015.
During the 2016 election, then-presidential candidate Trump pledged to bring manufacturing sector jobs back to the United States and focus on improving the country's economy.
The more robust second-quarter GDP reading reflected stronger consumer spending and business investment, partly offset by a steeper pullback in government spending.
Many economists had been forecasting growth in the current July-September quarter would be around 3%.
If the economy were to sustain the current pace of expansion, it would be a significant uptick from the 2 percent annual growth rate that has mostly prevailed since the recovery began.
The dollar firmed against a basket of currencies, while prices for U.S. Treasuries fell.
The report also confirms that inflation is moved away from the Federal Reserve's 2% annual target in the second quarter.
President Donald Trump is relying on growth above 3% to generate enough revenue for the government to pay for tax cuts and more infrastructure spending.
Yet there is little sign of this denting business or consumer confidence with 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.
This was the second of three estimates the government will provide for second-quarter growth.
Despite the acceleration in consumer spending, inflation remained benign in the second quarter.
Imports, which are a subtraction in the calculation of GDP, increased.