Economy Rebounds to 2.6 Percent Growth in Second Quarter

Randall Padilla
July 29, 2017

Gross domestic product, a broad measure of goods and services produced in the US, rose at a 2.6% annual rate in the April to June period, the Commerce Department said Friday. That improvement met analysts' expectations, but it leaves the USA economy chugging along in the same range of growth seen over the last two-plus years - acceptable but hardly spectacular.

This is the first economic report that captures the first full quarter of GDP growth since Trump became president.

Consensus expectations were for an increase of 2.5% for the quarter.

Government spending made a marginal contribution of 0.7% for the quarter after a 0.6% contraction previously. First-quarter growth was revised downward from 1.4% to 1.2%.

"The acceleration in real GDP (gross domestic product) growth in the second quarter reflected a smaller decrease in private inventory investment, an acceleration in PCE (personal consumption expenditures), and an upturn in federal government spending", the Commerce Department said.

Trade added 0.18 percentage point to growth, contributing to output for a second straight quarter.

"Overall, this bodes well for the rest of the year, with steady and solid growth numbers". Since 2013, real GDP has grown at an average annual rate of 2.3 percent.=.

Consumer spending, which represents more than two-thirds of all US economic output, came in at a stronger than anticipated 2.8% annual rate. "As more lawmakers around the country are recalibrating their incentive packages in response to the retail sector, I expect builders to increasingly look to repurposing vacant retail - often located in valuable locations with high access and parking - in their building plans over the next 18 months".

President Trump has pledged to pursue policies to boost the USA economy, including cutting corporate and individual taxes, but has faced a Washington impasse. It's a positive sign that Americans are opening up their wallets, especially since consumer spending makes up about 70 percent of the economy.

President Donald Trump often criticized this slowdown during last year's presidential campaign, saying his economic program of tax cuts, deregulation and infrastructure spending would double growth.

True, but it's also worth pointing out that almost none of Trump's economic plan has been put into place yet. They did roll back some of the later Obama-era regulations through the use of the Congressional Review Act, but have stalled on everything else ever since.

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