USA economic growth jumps to 2.6 percent in Q2

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Those expecting a big boost in the USA economy will have to wait a little longer. Consumer spending, which makes up more than two-thirds of the USA economy, grew at a 2.8 per cent rate, accelerating from 1.9 per cent pace in the first quarter.

It means that France's economy has now grown steadily for the previous year, and by 0.5% per quarter for the last nine months.

Real gross domestic product increased at an annual rate of 2.6 percent in the second quarter of 2017 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis.

That puts the first half average growth at 1.9%, still under 2%, and no great shakes, points out Thomas Byrne of Wealth Strategies & Management.

The pace of United States economic growth picked up in the second quarter after a tepid showing in the first three months as consumer spending picked up pace, and federal government investment and exports expanded. The value of newly produced but unsold goods slipped by $2.6 billion in a bit of a surprise. Federal government spending provided a significant boost (2.3% increase), although that reflects a lot of defense spending (5.2% increase). In addition, it revised first quarter growth down from 1.4 percent to 1.2 percent.

However, business investment slowed to 0.5% from 2.1% in January to March. However, spending on housing investment was notably weak, declining by 6.8%. That measure has been relatively volatile, and ended up negative in 2016 as well as in Q1. By comparison, growth averaged 3.6% during a 10-year span in the 1990s and 4.9% during a almost nine-year stretch in the 1960s, the only two expansions with longer durations.

"Even if the markets are juiced by good second-quarter GDP, there is a risk that it may be reversed as we come back from our summer holidays and the battle over the continuing resolution resumes with a potential government shutdown looming", said Megan Greene, chief economist at financial services firm Manulife. Overall, however, there's not much of a story here.

The faster pace of expansion was driven by 2.8 per cent annual growth in consumer spending, up from a 1.1 per cent rate of growth in the first quarter.

What's remarkable is that even though it hasn't quite felt like it, the US economy just recorded its 96th month of growth since the Great Recession. The result was the best since October 2000 when the economy posted year-over-year growth of 4.7 per cent.

U.S. President Donald Trump campaigned on a promise to boost economic growth to 3 percent or higher by cutting regulations, taxes, and a major health care program while boosting spending on infrastructure. They did roll back some of the later Obama-era regulations through the use of the Congressional Review Act, but have stalled on everything else ever since.

The GDP report comes as Trump hopes to pivot away from Thursday night's health care debacle and turn his attention to tax reform and the economy.

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