US second-quarter GDP growth revised up to 3%

WASHINGTON: The US economy grew faster than initially thought in the second quarter, notching its quickest pace in more than two years, and there are signs that the momentum was sustained at the start of the third quarter.

Gross domestic product increased at a 3% annual rate in the April-June period, the Commerce Department said in its second estimate yesterday. The upward revision from the 2.6% pace reported last month reflected robust consumer spending as well as strong business investment.

Growth last quarter was the strongest since the first quarter of 2015 and followed a 1.2% pace in the January-March period. Economists polled by Reuters had expected that second-quarter GDP growth would be raised to a 2.7% rate.

Retail sales and business spending data so far suggest the economy maintained its stamina early in the third quarter.

Strong growth and a labour market that is near full employment support views the Federal Reserve will lay out a plan to start unwinding its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities next month and increase interest rates in December.

With GDP quickening in the second quarter, the economy grew 2.1% in the first half of 2017. That was up from the 1.9% reported last month.

Republican President Donald Trump has set an ambitious 3% growth target for 2017, to be achieved through a mix of tax cuts, deregulation and infrastructure spending.

The Trump administration has so far failed to pass any economic legislation and is yet to articulate plans for tax reform and infrastructure. Chances are slim that the Republican-controlled US Congress will debate and pass tax reform legislation before the end of the year.

So far, the political gridlock in Washington has not hurt either business or consumer confidence.