The U.S. economy grew at a faster rate than was initially thought during the second three months of 2017, marking its quickest pace in over two years, with signs the momentum sustained itself to start the third quarter.
Gross domestic product was up at an annualized rate of 3% from April through June, said a report released by the Commerce Department on Wednesday. This was its second estimate for the second quarter.
The revisions upward from the pace of 2.6% first reported in July reflected strong consumer spending and strong investment by business.
Growth during the second quarter was the economy’s strongest since the 2015 first quarter and followed a pace of 1.2% expansion for the first three months of this year. Economists were expected growth in GDP for the second quarter of 2.7%.
Business spending and retail sales data thus far have suggested the economy kept its pace early into the third quarter. On Wednesday, other data showed that private employers increased their hiring during August with the addition of 237,000 new jobs compared to an increase in July of 201,000.
ADP’s National Employment Reports became available today ahead of the more comprehensive government employment report that will be released on Friday, which most expect to show strong job gains for August.
The U.S. dollar extended its gains against a basket of different currencies following the release of the data, while prices of Treasuries in the U.S. dropped and stock futures in the U.S. trimmed their gains.
A strong labor market and growth support the views that the Federal Reserve will begin its unwinding of a portfolio worth $4.2 trillion of mortgage based securities and Treasury bonds in September and hike interest rates again in December.
With the GDP quickening its pace during the second three months of 2017, the economy expanded 2.1% during the 2017 first half, which was up from last month’s reported increase of 1.9%.
U.S. President Donald Trump set a 3% growth target for the full year that he said would be achieved through deregulation, spending on infrastructure and tax cuts.
The White House administration thus far has not passed any legislation related to the economy and has not yet released any plans for its tax reform or infrastructure.
It is not likely that Congress will debate then pass any legislation on tax reform prior to the end of 2017.
Thus far it appears the gridlock on Capitol Hill has not been damaging to consumer confidence or business.