US GDP Growth Accelerates In Line With Estimates In Q2

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The giant U.S. economy recovered some of the momentum it lost at the start of the year as the American consumer kicked into a higher gear.

The US economy grew by 2.6% in the second quarter, according to Commerce Department figures. Meanwhile, first-quarter growth was revised down to 1.2% from a previous estimate of 1.4%.

The US dollar weakened after the report.

The 2.6 percent GDP gain came in close to economists' expectations. Consumer spending, which makes up more than two-thirds of the USA economy, grew at a 2.8 percent rate.

Yet the International Monetary Fund said that its forecast for global growth remained unchanged, given strengthening economies in France, Germany, Italy, Spain, Japan and Canada. Inflation was very weak, at only a 1.0% rate.

Also on Friday, the department's Bureau of Economic Analysis issued an annual benchmark revision of its data going back three years.

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On Monday, the International Monetary Fund decreased its estimate of how fast the US economy would grow in coming years, saying that USA government policy looked less likely to stimulate the economy than the organization believed in April.

The core is similar, at 1.1% and down from 2.4% in the first quarter.

In a scheduled release the Bureau of Economic Analysis (BEA), the United States agency that compiles gross domestic product data, said last quarter's growth rate came in at 1.2%, revised down from 1.2%. Consumer spending accounts for 70 percent of economic activity. But those effects were offset by a pick-up in other types of investment, consumer spending and stronger exports. But housing construction tumbled at a 6.8 percent rate, a payback after an 11.1 percent surge in the winter due to warmer-than-normal weather. That was an acceleration from the 1.9 percent pace logged in the first quarter.

Spending on mining exploration, wells and shafts grew at a 116.7 percent rate, slowing from the first-quarter's robust 272.1 percent pace. But it is unlikely that GDP will top 2.5 per cent for the full year.

Even with the spring rebound, analysts believe the economy will be unable to meet the ambitious targets set by Trump. Annual wage growth has struggled to rise above 2.5 percent.

During last year's presidential campaign, Trump attacked the Obama administration's economic record and said he could jump-start growth through a program of tax cuts for individuals and businesses, regulatory relief, tougher enforcement of trade laws to lower USA trade deficits and an increase in spending on infrastructure projects. However, most economists wouldn't attribute the growth to the president's policies, since not much has been implemented yet.

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