The new figure for second quarter gross rose domestic product (GDP) looks a lot better than the old one.
In the government's second revision, released Wednesday, Q2 GDP rose to 3% from 2.6% reported initially.
This was higher, too, than economists' expectation for 2.8% growth.
"The revised GDP growth rate likely comes as a sigh of relief for folks looking for further confirmation that the U.S. economy is moving along swiftly," says Mike Loewengart, investment strategist at Etrade. He adds:
With solid recent retail sales numbers and this morning's blockbuster ADP jobs numbers, growth was expected but certainly not guaranteed. For investors, today's numbers punctuate a wild week of market events after a brief summer lull. Volatility has returned, geopolitical tension is rising, and the devastation of Harvey has many observers questioning what's in store for the future, particularly as the U.S. dollar declines. These uncertainties will likely weigh heavily on Fed officials as they ponder the fate of their balance sheet, and may alter the cadence of rate hikes.
The yield on the benchmark 10-year Treasury note was little changed, despite the bevy of positive economy news reports. It had risen just 1 basis point to 2.15% by 9:15 a.m. ET Wednesday.
Growth isn't expected to stay this robust, however. Gains were powered by consumer spending, which may not remain so strong. Robert Frick, corporate economist with Navy Federal Credit Union, comments:
Spending was revised to 3.3% from 2.8%, and consumers account for two-thirds of GDP. But is it sustainable? Given wage gains are meager, and consumers are saving less and charging more, this may be a temporary surge. Not coincidentally, today the ADP Employment report revised up its job numbers. Americans are optimistic given the jobs situation, and that may be what's behind increased spending.
PNC is forecasting 2.2% economic growth for all of 2017, up from 1.5% last year. Economist Gus Faucher notes that the three-handle on GDP growth really just applies to quarter-over-quarter growth:
There were upward revisions to consumer spending and business fixed investment, somewhat offset by a larger decline in state and local government spending. Growth in the first quarter of the year was 1.2 percent. The economy grew 2.2 percent in the second quarter from one year earlier.
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