Q2 GDP Grew By 4%

Good news for the economy. The government reported that the economy expanded by 4% during the second three months of the year. The terrible number for Q1 was revised up from -2.9% to 2.1%. Still bad, but not quite as bad.

The GDP figure was aided by inventory rebuilding. The opposite effect caused much of the damage for Q1.

Over the past year, the economy grew 2.4%—slightly ahead of the 2.3% average annual gain from recovery’s start until the end of 2013, before an unusually cold winter socked the economy.

The first-quarter “was an anomaly and growth will be much stronger through the rest of this year,” said PNC Financial Services Group economist Stuart Hoffman. “Consumers are spending thanks to job and income gains, and with borrowing costs still low businesses are investing to meet stronger demand.”

Annual revisions, also released Wednesday, showed the economy expanded at a 4% pace in the second half of 2013, the best six-month stretch in 10 years. But figures over the past five years, including new revisions back to 2011, continue to tell a familiar tale. Unable to string together several quarters of steady growth, the recovery that began in 2009 is still the weakest since World War II.

Wednesday’s report showed household spending advanced at a 2.5% rate last quarter, an increase from the first quarter’s modest 1.2% gain. Spending on total goods accounted for its highest contribution to GDP since late 2010, and spending on long-lasting durable goods was near a five-year high, led by a big jump in auto sales.

Gold and stocks are down, while bonds are up.

Posted by on July 30th, 2014 at 11:27 am

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