U.S. economy grew faster than initially estimated in Q2
2013-08-30 16:46:54
Reflecting revisions to imports and exports, the Commerce Department released a report on Thursday showing that the U.S. economy grew by more than previously estimated in the second quarter.
The report said GDP increased by 2.5 percent in the second quarter, reflecting an upward revision from the advance estimate of 1.7 percent growth.
Economists had been anticipating a somewhat more modest upward revision to the pace of GDP growth to about 2.2 percent.
The Commerce Department said the upward revision the pace of GDP growth primarily reflected an upward revision to exports and a downward revision to imports, which are a subtraction in the calculation of GDP.
The report said exports rose by 8.6 percent compared to the previously reported 5.4 percent growth, while imports increased by 7.0 percent versus the initially estimated 9.5 percent jump.
While the report also showed an upward revision to private inventory investment, a downward revision to state and local government spending limited the upside.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The upward revision to GDP growth was principally because net external trade ended up making a neutral contribution, whereas the initial estimate assumed it subtracted 0.8% from overall growth."
With the upward revision, the second quarter GDP growth reflects a notable acceleration from the 1.1 percent growth seen in the first quarter.
The Commerce Department said the acceleration in the pace of GDP growth primarily reflected upturns in exports and in non-residential fixed investment and a smaller decrease in federal government spending.
Meanwhile, the report said consumer spending increased by 1.8 percent in the second quarter, reflecting a slowdown from the 2.3 percent growth seen in the first quarter.
Ashworth said the upward revision to the pace of GDP growth should give Fed officials more confidence that the recovery is gathering steam as the fiscal drag begins to fade.
"Under those circumstances, we still think the Fed will begin tapering its monthly asset purchases in September," he added. "That said, it's no certainty and August's non-farm payroll figures will be watched closely."
On the inflation front, the Commerce Department's reading on core consumer prices, which exclude food and energy prices, rose by an unrevised 0.8 percent in the second quarter following a 1.4 percent increase in the first quarter.