The U.S. GDP just surged from a first quarter low of 1.2% to 2.6% in the second quarter thanks to U.S. consumers. In fact, consumer spending fueled most of the jump, with a 2.8% rise in the second quarter from 1.9% at the start of the year.
Interesting to note, the Atlanta Federal Reserve had just lowered its second quarter GDP estimates to 2.4% based on retail sales and consumer prices prior to that report. The New York Federal Reserve lowered its estimate to 1.9% from 1.96%, as well. Hopefully they were pleasantly surprised at the higher number.
Fueling part of the 2.6% growth spurt was an impressive 8.2% jump in business spending. That by the way, is the fastest spending growth on equipment in about two years, and a strong signal that companies are again optimistic about the economy.
Granted, growth was slowed somewhat because of lower spending in housing and business inventory, but consumer spending and stronger exports quickly offset that.
Growth was also buoyed by investments from sectors such as information technology and oil and gas – which, according to Fitch Ratings, is finally reinvesting in new infrastructure as oil prices begin to recover, as reported by The Washington Post.
“Investment, which has disappointed over the past couple years, is coming back, and that’s an encouraging sign for the future,” they noted.
Even better, employers are now adding more jobs at a steadier pace.
Quarterly earnings continue to do well, too with Boeing, Facebook and Shell posting strong reports. Plus, disposable income just posted the best back-to-back quarter since the first half of 2015, according Bloomberg.
Right now, the economy has grown 1.9% since the start of the year. However, some including President Trump believe we could see a full-year rate of 3%.
This good news is a clear sign that strong growth is likely to stay.
No wonder the stock market is setting new records, and investors are so excited these days.