The U.S. economy grew faster than initially thought in the second quarter thanks to strong consumer spending, while corporate profits rebounded, which should help sustain the expansion.
Gross domestic product (GDP) grew at a 3 percent annualized rate last quarter, the Commerce Department’s Bureau of Economic Analysis reported Thursday in its second estimate of second-quarter GDP. That’s an upward revision from the 2.8 percent rate posted last month.
The economy grew at a rate of 1.4% in the first quarter. Economists surveyed by Reuters They expected GDP to remain unchanged at 2.8%.
Consumer spending, which accounts for more than two-thirds of the economy, rose at an upwardly revised 2.9% pace. Growth of 2.3% had been previously reported. This offset declines in business investment, exports and private inventory investment.
Spending is supported in part by wage increases, but momentum is slowing as the labor market loses speed. Personal income rose by $233.6 billion in the second quarter, a downward revision of $4 billion from the previous estimate.
Corporate profits, including adjustments for inventory valuation and capital expenditures, rose $57.6 billion, after falling $47.1 billion in the first quarter.
Profits at domestic financial firms rose by $46.4 billion, while those at non-financial institutions rose by $29.2 billion, more than offsetting an $18 billion decline in profits at the rest of the world.
From an income perspective, the economy grew at a rate of 1.3% last quarter. Gross domestic income (GDI) increased at a similar rate in January-March.
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