GDP growth rate rebounds to 2.6%

WASHINGTON — The U.S. economy rebounded this spring after a weak winter, expanding at a solid 2.6% annual rate as consumers picked up their spending pace, the Commerce Department said Friday.

Total economic output, also known as gross domestic product, for the Aprilthrough-June period was in line with analyst expectations for a bounce-back based in part on pent-up demand.

The economic growth rate was more than double the 1.2% pace in the first quarter. That figure was revised down Friday from an earlier estimate of 1.4%.

“After the winter blues, the economy has rebounded,” said Sung Won Sohn, an economist at Cal State Channel Islands.

The stronger second quarter means the economy expanded 1.9% in the first half of the year. That is roughly in line with estimates by the Federal Reserve and International Monetary Fund of 2.1% this year, which would be similar to the sluggish growth that has plagued the recovery from the Great Recession.

The report, the first of three official government estimates for the quarter, was good news for President Trump as it indicated that the economy’s lackluster first-quarter performance was an anomaly. In a research note, Barclays said the stronger growth showed the first-quarter weakness “was just a blip.”

Trump touted the new data on Friday. “GDP is up double from what it was in the first quarter,” he said in New York. “We’re doing well. We’re doing really well.”

But the new data underscored the challenge facing Trump to fulfill his pledge of at least 3% annual growth, and is likely to increase calls from Republicans and businesses for big tax cuts to spur the economy.

White House and congressional Republican leaders took a key step toward tax reform Thursday by agreeing to ditch a controversial proposal for a border tax and agreeing on a broad set of principles.

But the outlook for large tax cuts remains unclear, particularly with the loss of offsetting revenue that would have come from the border-adjustment tax.

Consumer spending growth improved to a healthy 2.8% in the second quarter. It had been just 1.9% in the first quarter.

A key measure of business investment grew at 5.2% in the first quarter. That was down from 7.2% in the first quarter — the best performance since 2014 — but still a strong performance amid higher business confidence since the November election.

But in a troubling sign, spending on residential construction and improvements declined 6.8% in the second quarter, the biggest drop since 2010.

Government spending posted its largest gain in more than a year in the second quarter. The 0.7% increase was driven by a 5.2% boost in defense spending.

U.S. exports showed a solid 4.1% gain, although that was down from 7.3% the previous quarter.