The U.S. economy expanded faster than initially estimated in the spring, as Americans spent more freely and businesses stepped up investment, according to revised government data.
Gross domestic product rose at a 3.3 percent annualized rate in the second quarter, up from the Commerce Department’s initial 3.0 percent estimate and above the 3.1 percent pace economists had forecast. The acceleration followed modest growth in the first quarter.
The upward revision reflected households spending more on health care, pharmaceuticals and dining out, while companies boosted purchases of equipment and intellectual property. Business investment was driven by stronger outlays on software, research and development, light trucks, and commercial structures.
Trade flows also contributed to growth. Imports, which subtract from GDP calculations, declined after surging in the first quarter ahead of new tariffs on some goods.
Exports slipped, but not enough to offset the arithmetic boost from fewer foreign goods flowing into the country.A key gauge of underlying domestic demand—real final sales to private domestic purchasers, which excludes trade, inventories, and government spending—rose at a 1.9 percent rate, up from 1.2 percent in the earlier estimate.
Price pressures remained in check. The personal-consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, increased at a 2.0 percent annual rate, matching the central bank’s target. Core prices, which exclude volatile food and energy costs, advanced at a 2.5 percent pace.
Government spending was revised lower, driven by reduced state and local outlays, which tempered some of the gains in private demand.
The income side of the national accounts painted a similarly robust picture. Real gross domestic income climbed at a 4.8 percent rate, while corporate profits rebounded after declining in the first quarter.
The Commerce Department is scheduled to release its third and final estimate of second-quarter GDP, along with annual benchmark revisions to historical data, on Sept. 25.
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