Gross domestic product — the value of goods and services
produced in the U.S. — expanded at a seasonally adjusted annual rate of 2.3% in
the April-June period, the Commerce Department said Wednesday.
Economists surveyed by Bloomberg expected 2.5% growth. The government also
revised up its estimate for the first quarter, turning a 0.2% contraction into
0.6% growth, mostly because of stronger business investment and federal
government spending. But it revised down estimates for 2011 to 2014, revealing
that growth in that period was somewhat weaker. The economy expanded by 2% in
that period, below previous estimates of 2.3%
The economy's still-weak first-quarter showing has been
largely blamed on temporary factors such as rough weather and a West Coast
ports slowdown. Many expect the economy to grow by a solid 3% at an annual rate
in the second half of the year.
The economy's solid but not spectacular performance in the
second quarter could help the Federal Reserve decide whether to raise interest
rates for the first time in nearly a decade at its September meeting. Strong
job and income growth and low gasoline prices prompted Americans to open their
wallets in the second quarter as consumer spending increased 2.9%, up from
1.8% in the first quarter.
And exports jumped 5.3% after falling 6% previously. The
strong dollar has hurt U.S. shipments but its effects have eased recently. Business
investment advanced 0.6%, a slowdown from the first quarter, but spending on
housing construction remains solid, rising 6.6%. Slower business stockpiling
subtracted slightly from growth after adding to it in the first three months of
the year. And federal government spending fell modestly.
The economy continues to face some obstacles, such as low
oil prices that have dampened drilling activity and business investment, and
reduced orders for steel and other manufactured goods. And the economy's modest
performance the past several years has been even weaker than first estimated,
partly because of softer consumer spending.
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