The U.S. economy has been growing faster than expected lately, helped by solid gains in personal spending and businesses building their inventories of goods to sell later. And growth could soon get a bump even higher due to hurricane reconstruction.
The Commerce Department on Thursday released its final tally of second-quarter growth in gross domestic product, which is the total value of all goods and services produced in the U.S. Analysts on Wall Street and in Washington often use GDP as the bottom-line measure of how the economy is doing overall.
GDP grew at 3.1 percent annualized pace in the second quarter, the fastest growth rate since early 2015. The growth rate was helped by a 3.3 percent gain in consumer spending, which comprises about two-thirds of the overall economy.
The Commerce Department also said inventory investment, an increase in exports, and an upturn in federal spending helped boost GDP. Those factors helped offset the drag from weaker readings of residential investment and state and local government spending.
Analysts believe growth is likely to slow in the near term. But a return to form is likely in the last three months of the year, when reconstruction from the barrage of hurricanes Harvey, Irma, and Maria is likely to boost growth at the end of the year.
Other key details:
- The new data also showed that individuals’ earnings slightly outpaced growth in the broader economy in the second quarter. After-tax incomes adjusted for inflation were up 3.3 percent, slightly better than the previous estimate of 3.2 percent.
- Growth of 3.1 percent in the second quarter was also significantly better than the first quarter’s 1.2 percent expansion.
- It was also the fastest pace for U.S. growth in more than two years. But altogether first half growth was 2.2 percent, which is basically the pace at which the U.S. economy has grown in recent years.