WASHINGTON — U.S. economic growth in the second quarter was revised upward to a seasonally adjusted 1.7% annual rate from the previous 1.6% estimate, due to stronger inventory and consumer spending, the Commerce Department reported Thursday.
This was the third and final estimate for gross domestic product in April, May, and June. The 1.7% growth rate compares with the 3.7% pace recorded in the first quarter. Quarterly economy growth has averaged an annualized rate of 1.7% the past 10 years.
Consumer spending, which accounts for more than two-thirds of GDP, was also revised upward to a 2.2% expansion rate in the second quarter from the previously reported 2.0% pace. It was the strongest quarter for consumer spending growth in more than three years.
“The economy grew at a 1.7% rate, close to the estimate that we saw last month,” Diane Swonk, chief economist at Mesirow Financial, said in a report. “That, however, is less important than the fact that we will see two [or three] quarters of less than 2% growth, which means an even higher unemployment rate before the year is over.”
Imports, which subtract from economic growth, were revised upward to 33.5% for the quarter from the 32.4% estimate reported last month. Imports, slashed 4.58 percentage points from the GDP expansion rate, compared with the 4.45 percentage point cut reported in the preliminary GDP report.
The trade deficit between imports and exports widened from the preliminary estimate by $3.3 billion to $539.3 billion.
Business investment spending was revised higher to a 26.2% increase from 25.0%. Private inventories rose, adding 0.82 percentage point to GDP growth instead of the 0.63 percentage point contribution reported last month.
Core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation, was revised lower to a 1.0% growth pace from the 1.1% rate reported last month. It was the smallest core PCE increase since the first quarter of 2009.
Economists estimated GDP would increase 1.6% in the quarter and core PCE would expand 1.1%, according to the median estimate from Thomson Reuters. The Commerce Department’s first estimate for third-quarter GDP will be released Oct. 29
