US GDP revised sharply higher in second quarter
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The news: The US economy grew faster that previously thought in the second quarter this year, as the government revised up its previous estimate of consumer spending.
The numbers: The Bureau of Economic Analysis (BEA) said that inflation-adjusted gross domestic product in the US increased at a revised 3.8% annualised pace, up on the 3.3% advance previously reported and sharply higher that the contraction in the first quarter.
The context: In its third GDP estimate for the quarter the BEA said that the increase in real GDP in the second quarter primarily reflected a decrease in imports on the back of Trump’s trade tariffs and an increase in consumer spending. These movements were partly offset by decreases in investment and exports.
A front-loading of imports as businesses scrambled to secure inventory before Trump’s tariffs took effect had a dampening effect on GDP in the first quarter.
Reuters reports that the readings from the first two quarters of the year are not a true reflection fo the health of the US economy due to the wild swings in imports,
Q2 growth was also supported by investment in intellectual property products, largely artificial intelligence.
Meanwhile, separate data for August released on Thursday showed orders for business equipment increased at a solid pace while the merchandise trade deficit narrowed by more than forecast. Initial applications for unemployment benefits fell to the lowest since mid-July.
The source: Bureau of Economic Analysis
