US Economy Glides Back to Steady, Modest Growth Path

Traders work on the floor of the New York Stock Exchange

Many economists, however shrugged off that performance, saying Commerce routinely underestimates growth early in the year because of challenges making seasonal adjustments in categories such as defense spending and exports.

United States growth rates have the potential of improving from the anemic rates seen in the Hussein Obama recovery, the weakest in the post-World War II period.

The second-quarter advance.

The growth rate for the first quarter was cut to 1.2%, compared with the previous estimate of 1.4%.

The latest growth figures suggest the Federal Reserve could still raise interest rates later this year, which would be the third increase in 2017.

A reading on core consumer prices, which exclude food and energy prices, showed that the pace of price growth slowed to 0.9% in the second quarter from 1.8% in the first quarter.

For the year a whole, I am now predicting real GDP growth of 2.2 percent, with 2.6 percent growth for the current third quarter. President Donald Trump has set an ambitious 3.0 per cent growth target for 2017. That stronger global environment, combined with recent weakness in the USA dollar, is likely to help boost American exports in coming months.

The International Monetary Fund (IMF) also said on Thursday that it expected the USA economy to grow at 2.1 percent this year and next, supported by solid consumption growth and a rebound in investment. Consumer spending accounts for 70 percent of economic activity.

The economy got a big boost from a rebound in consumer spending, the largest source of the nation's economic growth.

The revisions made minor changes to economic history, putting growth at 2.6 percent in 2014, up from 2.4 percent. Therefore, net exports added 0.18 percentage points to real GDP growth.

Goods-producing industries led May's growth, rising 1.6 percent. Output increased 2.6%, which matched Econoday.com's consensus forecast.

Growth was buoyed by investment from sectors like information technology and oil and gas, which is finally reinvesting in new infrastructure as global oil prices recover from previous lows, said Charles Seville, senior director at Fitch Ratings.

Business spending on equipment is expected to have picked up from the first quarter's 7.8 percent rate, marking a third straight quarterly increase.

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