On Thursday, Commerce Department announced in the third estimate of Gross domestic product that GDP in the second quarter expanded at 1.4% annual rate, raising from 1.1% annual rate estimated last month. The revise was above analysts’ expectations.
The announcement shows a positive outlook for the economic. According to the statement, consumer spending, which makes up two-thirds of overall economic activity in the United States, increased at a 4.3% annual rate in the second quarter. The revised data also showed that business put more money into R&D and cut investments in equipment and buildings less than previous estimate, which led to 1% annual rate in business investment. It is a sign of the end of slump in business investment. Government spending decreased at a 1.7% rate in Q2, which was above the previous estimate of down 1.5%. In addition, exports increased more than imports, which also boost GDP in the second quarter. It is the most increase since Q3 in 2014.
Compared to the 0.8% annual rate in the first quarter, the 1.4% revised rate is an acceleration, but it is much slower than the average annual rate of around 2% after the recession. Economic growth was below 1.5% for consecutive three quarters, which showed that the economy was still stumbling after the recession.
“Growth was weak in the first half of the year, we’re seeing definite evidence that the economy is now expanding more strongly,” said Janet Yellen, the Chairwoman of Federal Reserve. Improved economic growth and progress in the labor market “have strengthened the case for an increase in the federal funds rate,” she said.
For the full year of 2016, Fed policy makers predict that economic growth will be at 1.8%, and Federal Reserve Bank of Atlanta projected a 2.8% increase in Q3.