Brisk consumer spending fueled economy’s rebound in spring
WASHINGTON — The U.S. economy rebounded sharply in the spring, growing at the fastest pace in more than two years amid brisk consumer spending on autos and other goods.
The gross domestic product, the broadest measure of economic health, grew at an annual rate of 3 percent in the April-June quarter, the Commerce Department reported Wednesday. It was the best showing since a 3.2 percent gain in the first quarter of 2015.
The result is a healthy upward revision from the government’s initial estimate of 2.6 percent growth in the second quarter. The growth rate in the January-March quarter was a lackluster 1.2 percent.
Paul Ashworth, chief U.S. economist at Capital Economics, said he believed that the strength in consumer spending should result in an “even stronger hand-off” for growth going into the current quarter.
President Donald Trump hailed the latest figures. “I happen to be one that thinks we can go much higher than 3 percent. There is no reason why we shouldn’t,” Trump told a crowd in Missouri where he was campaigning for support for the administration’s tax plan that would cut rates for individuals and businesses.
During last year’s campaign, Trump pledged to boost economic growth to 4 percent or better.
The budget the president released in May projects GDP growth will rise to 3 percent over the next four years and remain at that level for the rest of the decade. However, private economists and the nonpartisan Congressional Budget Office believe that forecast is unrealistic, forecasting average growth of just 1.9 percent over the next decade.
Even with the upward revision, the weak start to the year means that growth over the past six months has averaged 2.1 percent, the same modest pace since the recovery began in mid-2009.
Many economists had been forecasting growth in the current July-September quarter would be around 3 percent. Some are now saying that the devastation from Hurricane Harvey could shave about a half-percentage point off growth this quarter. However, analysts believe the pace of growth will bounce back once the rebuilding begins and oil refineries get back to full production, bringing down prices.