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Washington
—
The US economy’s rebound in the second quarter was stronger than previously reported, thanks to consumers who stepped up their spending despite jitters over President Donald Trump’s trade war.
Gross domestic product, which measures all the goods and services produced in the economy, registered an annualized rate of 3.3% from April through June, the Commerce Department said in its second estimate released Thursday. That’s up from the 3% rate in the first estimate.
The latest GDP estimate shows that the economy still rebounded sharply from the 0.5% decline in the first quarter. GDP is adjusted for seasonal swings and inflation.
Consumer spending, which accounts for about two-thirds of the US economy, in second quarter was revised up to a 1.6% annualized rate in the latest estimate, up from the 1.4% previously reported.
Business investment — known as nonresidential fixed investment — had an even bigger upward revision in the second estimate, up to 5.7% from 1.9%. The bulk of that spending from businesses was on intellectual property products.
While the economy’s growth in the second quarter can be mostly attributed to trade swings and consumers, a look under the hood shows that underlying momentum is sputtering.
“With the initial brunt of the tariff shock behind us and the economy losing momentum, we expect to see sub-1% GDP growth in the second half of the year,” said Oren Klachkin, financial markets economist at Nationwide, in analyst note Thursday. “A weakening labor market and modestly higher tariff-induced inflation will constrain activity through year-end.”
This is a developing story and will be updated.