U.S. economy grows 4% in second quarter

08/05/2014

U.S. economy grows 4% in second quarter

U.S. economy grows 4% in second quarter

 

WASHINGTON – July 30, 2014 – The US economy grew at an annual rate of 4 percent in the second quarter, according to an initial government estimate Wednesday.

The figure marks a turnaround after gross domestic product registered its first decline in three years in the previous quarter.

The rebound in the April-June period reflected gains in consumer spending and business inventory. Consumer spending rose 2.5 percent, spurred by purchases of durable goods after growing just 1.2 percent in the previous quarter, the Bureau of Economic Analysis said.

The boost in second quarter GDP outpaced economists' expectations. A survey of economists by Bloomberg news agency had predicted 3 percent growth in the period.

Updated data showed first quarter growth fell a revised 2.1 percent, which is less than the 2.9 percent drop the Bureau of Economic Analysis reported last month.

The steep first quarter decline was attributed to an extremely hard winter that kept consumer spending down, along with declines in private inventory investment and state and local government spending.

The International Monetary Fund (IMF) last week lowered its 2014 growth forecast for the US economy, pointing to the extremely weak first quarter.

GDP would increase by a "disappointing" 1.7 percent over the year, the Washington-headquartered IMF said in a report.

Markets were closely watching the growth figures as well as a decision expected later Wednesday by the Federal Reserve on its long-running bond buying program.

The figures released Wednesday are an initial estimate based on incomplete data and the government is due to release more complete figures next month.

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