US Second-Quarter Economic Growth Revised Higher on Consumer Spending

• The U.S. economy grew faster than initially thought in the second quarter amid strong consumer spending, while corporate profits rebounded, which should help to sustain the expansion.
• Gross domestic product (GDP) increased at a 3.0% annualised rate last quarter, the Commerce Department's Bureau of Economic Analysis said in its second estimate of second-quarter GDP on Thursday. That was an upward revision from the 2.8% rate reported last month. The economy grew at a 1.4% pace in the first quarter. Economists polled by Reuters had forecast GDP would be unrevised at a 2.8% pace.
• Consumer spending, which accounts for more than two-thirds of the economy, increased at an upwardly revised 2.9% rate. It was previously reported to have grown at a 2.3% pace. This offset downgrades in business investment, exports, and private inventory investment.
• Spending is being supported in part by wage gains, but momentum is slowing as the labour market shifts into lower gear. Personal income increased by $233.6Bn in the second quarter, a downward revision of $4.0Bn from the previous estimate. Corporate profits, including inventory valuation and capital consumption adjustments, increased $57.6Bn after declining by $47.1Bn in the first quarter.
• Profits of domestic financial firms increased $46.4Bn, while those of non-financial institutions rose $29.2Bn, more than offsetting a $18.0Bn decline in profits from the rest of the world. When measured from the income side, the economy grew at a 1.3% rate last quarter. Gross domestic income (GDI) increased at a 1.3% pace in the January-March quarter.

(Source: Reuters)