The U.S. economy grew at a modestly faster pace in the second quarter than previously estimated, but the latest data confirms the expansion decelerated in the first half of the year.
Gross domestic product, a broad measure of goods and services produced across the economy, expanded at an inflation-adjusted 1.4% seasonally adjusted annual rate in the second quarter, the Commerce Department said Thursday. That’s up from last month’s estimate of a 1.1% growth rate during the spring. Economists surveyed by The Wall Street Journal expected revised GDP growth at a 1.3% pace for the April to June period.
U.S. stock markets were slightly lower in premarket trading Thursday.
Second-quarter growth accelerated from the first quarter’s 0.8% pace, but was slower than the roughly 2% annual rate averaged since the recession ended in mid-2009. The current expansion’s pace is the weakest of any since 1949.
Thursday’s report showed a measure of business investment improved rather than declined, accounting for most of the upward revision.
Economic growth has held below a 1.5% pace for three straight quarters. The marked slowdown during an already sluggish expansion raised concerns that the economy was stumbling seven years after the recession ended.
But many economists project output began to accelerate a bit this summer and should return to at least the expansion’s average growth rate during the second half of the year. Similarly, payroll growth improved in recent months after a spring slump.
“Growth was weak in the first half of the year, we’re seeing definite evidence that the economy is now expanding more strongly,” Federal Reserve Chairwoman Janet Yellen said last week. Improved economic growth and progress in the labor market “have strengthened the case for an increase in the federal funds rate,” she said. The central bank has held its benchmark interest rate steady since December.
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