US Economy Grows Faster Than Expected At 1.7% In Q2
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The U.S. economy grew at an annualised pace of 1.7 percent in the second quarter of the year, beating analysts’ expectations and raising the likelihood that the U.S. Federal Reserve will end its monetary easing programme sooner rather than later.
The better-than-expected report was almost twice as fast as many economists had predicted due to the impact of federal spending cuts and also from the continuing weakness in the global economy.
The U.S. economy grew at an annualised pace of 1.7 percent in the second quarter of the year, beating analysts’ expectations and raising the likelihood that the U.S. Federal Reserve will end its monetary easing programme sooner rather than later.
The better-than-expected report was almost twice as fast as many economists had predicted due to the impact of federal spending cuts and also from the continuing weakness in the global economy.
On Wednesday, data from the Commerce Department showed that U.S. consumers kept spending despite higher taxes, adding 1.2 percentage points to growth in the second quarter, while business investment contributed 0.6 percentage points, and the continued rally in housing was worth 0.4 percentage points on the total.
That was offset by a subtraction of 0.8 percentage points from trade, with a particularly strong rise in imports, and a small decline in government spending as a result of across-the-board sequester cuts.
Related: US Budget Cuts “Excessively Rapid and Ill-Designed”: IMF
Related: Obama Proposes “Bold” Plan To Boost Middle Class
Related Infographic: Head-to-Head Between The Great Depression & Great Recession
Compared with the previous three months, the U.S. economy grew by 0.4 percent in the second quarter, compared with 0.6 percent growth in the U.K. for the same period.
The economic picture was further brightened by the ADP National Employment Report, which showed private employers added 200,000 jobs in July, maintaining June’s pace. It offered hope the government’s comprehensive employment report on Friday could show a recent run of fairly strong job gains extended to July.
Despite the sluggish recovery, the overall figures suggest that the world’s largest economy is gaining momentum which could give the Fed greater confidence to taper its asset purchases in September.
Following a two-day policy meeting, Federal Reserve officials on Wednesday gave no indication of when the tapering could begin but said that it would hold its key rate at near zero and keep buying $85 billion in bonds every month to help lower long-term interest rates.
“The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline,” it said, adding that the U.S. economy “expanded at a modest pace during the first half of the year”.
Related: US Fed Sees 2014 End For QE3
Related: US Federal Reserve Increasingly Divided Over QE3
