News Column

U.S. Economy Grows 1.7 Percent in 2nd Quarter

July 31, 2013
US Economy

The US economy grew at a better-than-expected annual rate of 1.7 per cent in the second quarter, an initial government estimate said Wednesday.

Gross domestic product (GDP) rose in the April-June period from a revised 1.1 per cent growth in the first quarter, the Bureau of Economic Analysis said. The first quarter figure was revised downward from the 1.8 per cent released last month.

Economic growth was bolstered by an increase in business investment and exports. However consumer spending, which accounts for most of the US economy, grew at a slower pace, rising 1.8 per cent, down from a 2.3 per cent increase in the previous quarter.

A decrease in federal government spending continued to weigh on growth, but the cuts had a considerably smaller effect than in the previous quarter.

President Barack Obama had warned the mandatory across-the-board cuts in government spending would hamper the economy. Federal government spending was down 1.5 percent in the second quarter after dropping 8.4 per cent in the previous period.

Economists surveyed by Bloomberg financial news had predicted GDP growth of 1 per cent.

Meanwhile, growth for last year was revised upward to 2.8 per cent from 2.2 per cent as part for a broad revision of data dating back to 1929, the Commerce Department said.

The US Federal Reserve has been closely monitoring economic growth and inflation as it weighs slowing its bond-buying programme in the coming months as the economy improves.

No change is expected to be announced after its meeting later Wednesday, but Fed chief Ben Bernanke said last month that step could begin later this year with an eye toward ending the extraordinary monetary policy measures by mid-2014.

A second estimate of second quarter GDP is due to be released August 29 ahead of the final figure in September.

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH. Distributed by MCT Information Services

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