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US growth picks up

August 27, 2015

The US Commerce Department has revised its estimate of US second-quarter economic growth sharply upward. It reported that domestic consumption was one of the main drivers of growth across the country.

https://p.dw.com/p/1GMwp
Michigan car production facility
Image: picture-alliance/dpa/J. F. Martin

Second-quarter gross domestic product (GDP) in the US grew by 3.7 percent year-on-year, the Commerce Department announced Thursday. The figure was much higher than the 2.3 percent rate reported in a first estimate last month.

Analysts said the GPD report, released in the wake of a global stock market sell-off, should assure investors and cautious Fed officials that the country was in a good enough shape to ride out growing strains in the world economy.

A day ago, New York Fed President William Dudley warned the argument in favor of a September increase in the central bank's key lending rate seemed "less compelling to me than it was a few weeks ago" in the face of market turmoil caused by free-falling Chinese stocks.

Playing the waiting game

But the upward revision of second-quarter growth could still provide support for a hike in the central bank's key lending rate later in the year.

Consumer spending - accounting for more than two-thirds of US economic activity - grew at a 3.1-percent rate, rather than the 2.9 percent pace calculated last month.

And the positive trend is continuing, with consumer spending getting off to a brisk start in the third quarter as retail sales rose solidly in July.

Household spending has been supported by a strong labor market and cheaper gasoline.

hg/nz (Reuters, dpa)