Money

United States growth upgraded to 3 percent in second quarter

United States growth upgraded to 3 percent in second quarter”

In the April-June quarter, gross domestic product - the broadest measure of economic health - grew at an annual rate of 3%, the U.S. Commerce Department reported Wednesday.

The second estimate, which incorporates more data, saw strong growth in personal consumption - which can indicate a general sense of financial security among the population - and nonresidential fixed investment, which can indicate bullishness on the business side.

Corporate profits (after IVA and CCA) increased by $26.8bn (1.3%) in the second quarter after a decrease of $46.2bn (2.1%) in the first quarter.

US Treasury Secretary Steven Mnuchin has previously stated that GDP growth of 3 percent would be very achievable for the Trump administration though tax and regulatory reforms. This was also an improvement from the 1.2 percent growth rate seen in the first quarter.

Trump frequently touts good economic news and accuses the media of failing to cover it.

A final (third) estimate will not come until late September.

The upgrade in GDP "has been somewhat positive for the US dollar and negative for fixed income", says Royce Mendes, director at CIBC Capital Markets, in an economics note. But net exports are expected to weigh more the growth, with refined product exports hard hit given the outages of Gulf Coast refineries and ports shuttered.

PNC is forecasting 2.2% economic growth for all of 2017, up from 1.5% previous year.

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"Soft inflation is raising questions over whether the Fed will go ahead with another interest-rate hike this year", MarketWatch noted.

The Trump administration had pledged to return the United States economy to sustained annual growth of 3.0 percent or more by slashing taxes and regulations while boosting trade.

This was the second of three estimates the government will provide for second-quarter growth.

Yet there is little sign of this denting business or consumer confidence with the GDP figures, added to retail sales, business spending and jobs survey data for the early part of the third quarter, painting a positive picture.

Growth in the USA expanded in the second quarter at a greater pace than previously estimated, as personal consumption and non-residential investment increased by more than forecast in the flash estimate.

Inflation as measured by the Fed's preferred PCE index decelerated sharply to a 0.3% gain in the second quarter down from a 2.2% increase in the first quarter.

Imports, which are a subtraction in the calculation of GDP, increased.

Consumer spending powered the second-quarter surge, rising a revised 3.3% compared to the government's original estimate of a 1.9% gain.



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