Second Quarter GDP Revised Upward
The economy grew at a faster pace in the 2nd quarter according to the latest Commerce Department revision:
WASHINGTON — The U.S. economy accelerated more quickly than expected in the second quarter thanks to a surge in exports, bolstering the case for the Federal Reserve to wind down a major economic stimulus program.
Other economic data on Thursday showed the number of Americans filing new claims for jobless benefits fell last week, a potential sign of faster hiring in August.
U.S. gross domestic product grew at a 2.5 percent annual rate in the April-June period, according to revised estimates released by the Commerce Department. That was more than double the pace clocked in the prior three months.
The reports could boost confidence that the economy is turning a corner despite government austerity measures and a still-high jobless rate.
The government had initially estimated that GDP expanded at a 1.7 percent rate in the second quarter. But recent data on trade showed that exports climbed during the period at their fastest pace in over two years.
The government also said data from retailers showed that businesses had restocked their shelves at a faster pace in the April-June period than initially estimated.
Economists polled by Reuters had forecast the economy growing at a 2.2 percent pace.
Many economists expect the economy will accelerate further in the second half of the year as austerity measures begin to weigh less on national output.
That drag was evident in the second quarter, when spending contracted at all levels of government. Indeed, Thursday’s data showed the economic drag from spending cuts was greater in the second quarter than initially estimated.
Still, the data could make officials at the U.S. central bank more confident in their plan to begin reducing monthly bond purchases later this year.
“The market will take (the data as a sign that) tapering would be more likely next month,” said Scott Brown, an economist at Raymond James in St. Petersburg, Florida.
While 2.5% growth isn’t exactly barnstorming, and not nearly at the level we’d need to get an earlier fix to the jobs situation, it’s better than what we saw in the 1st quarter and the final quarter of 2012 so there’s something to be said about that. What we haven’t seen, so far at least, though, is any sign of real growth in the jobs market. The reports for June and July were at best fair, and it seems unlikely that the August report, which will be released a week from tomorrow, will be much better. Meanwhile, the irony of all of this is that improved economic statistics means that the Federal Reserve Board is likely to start pulling back from its latest round of Quantitative Easing, and that’s likely to mean that the stock market contracts, something that itself could cause the economy to cool.