Thursday, July 31, 2014

GDP Comes Back Strong

The first estimate of second quarter GDP came in stronger than most economists had predicted, at 4.0 percent growth. On top of that, first quarter growth was revised upward a bit, from a loss of 2.9 percent to a loss of 2.1 percent.

The biggest factors: Spending on total goods made its highest contribution to GDP since late 2010, and spending on durable goods was also near a five-year high, led by the automobile industry. Business investment rebounded, increasing 5.5 percent in the second quarter. Housing also was a positive, after having subtracted from growth in the past two quarters.

The first quarter, one of two quarters since the recession ended in which the economy contracted, now looks like an anomaly. Over the past year, the economy has grown 2.4 percent—slightly ahead of the 2.3 percent average we'd seen in the recovery prior to the winter-wrecked first quarter of this year.

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