U.S. annual growth rate revised up to 3% in second quarter

Lucy Hill
August 31, 2017

Real GDP increased at an annualized rate of 3.0% in the second quarter of 2017.

GDP increased by about 1.5% in 2016 in the USA and by 2.9% in 2015, according to the BEA.

US economic growth in the second quarter was stronger than originally reported, reaching President Donald Trump's target amid robust consumer spending and business investment.

The report said consumer spending on wireless phones and their associated services pushed intellectual property investment up 4.9 percent.

Economists are also estimating how Hurricane Harvey could affect third-quarter growth. That was up from 201,000 jobs in July. Some credit President Barack Obama for handing off a solid economy to Trump; others point to the surge in business and consumer confidence after Trump was elected as an indication that the new president caused a shift in momentum. Early estimates indicate that Harvey has caused $40-billion (U.S.) worth of damage to homes, roads and businesses.

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President Donald Trump has repeatedly cited as his goal raising U.S. economic growth at an annual rate of 3 percent after eight years in which former President Barack Obama could not reach this benchmark in any quarter. American consumers remain in the driver's seat in the current expansion, backed by a strong job market, contained inflation and low borrowing costs. Economists had forecast a slight increase to 2.7% from 2.6% on the back of stronger consumer spending.

Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent (revised) in the first. Trump submitted a budget to Congress in May that was based on achieving growth rates in coming years of 3 percent on a sustained basis.

President Donald Trump had set a 3% target for long-term economic growth. As a result, the real GDP increased by 2.1 percent at the annual rate in the first half of 2017.

The increase in the estimate was mostly due to personal consumption expenditures and nonresidential fixed investment being larger than previously estimated. Spending on equipment jumped at a rate of 8.8 percent.

New figures show the United States economy expanded by 3% in the three months to the end of June, growing at its fastest pace in more than two years. At the same time, private inventories stabilized in the second quarter but added just 0.02 percentage points to headline growth. Trump's challenge is to make strong growth the norm, not a blip for a quarter or two. Housing was a drag on growth in the last quarter, with investment on homebuilding recording its worst performance in almost seven years. Motor vehicle production rebounded after two straight quarters of declines.

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