Economy grew at brisk 4.2% rate in Q2
WASHINGTON — Despite a bleak start to the year, the nation's economy grew at a brisk annual rate of 4.2 percent in the April-June quarter, the government said on Thursday, slightly faster than it had estimated.
The upward revision supported expectations that the second half of 2014 will prove far stronger than the first half.
The Commerce Department's second estimate of growth for last quarter followed its initial estimate of 4 percent. The upward revision reflected stronger business investment than first thought.
The seasonally adjusted 4.2 percent annual growth rate for the gross domestic product — the nation's total output of goods and services — came after the economy had shrunk at a 2.1 percent annual rate in the January-March quarter. That was the economy's biggest drop since the depths of the Great Recession, and it reflected mainly the effects of a harsh winter that kept consumers away from shopping malls and disrupted factory production.
Many economists say they expect growth of about 3 percent in the current July-September quarter and for the rest of the year.
During a White House news conference, President Obama took note of the upward revision in growth.
“There are reasons to feel good about the direction we are headed,” Obama said. “Companies are investing; consumers are spending.”
Still, he acknowledged, “there is a lot more that we should be doing to make sure that all Americans benefit from the progress that we have made.”
Obama said he would press Congress when it returns next week to take further actions to boost the economy.
The government's upwardly revised estimate of business investment last quarter showed capital spending growing at an annual rate of 8.4 percent last quarter. That was sharply higher than the government's initial 5.5 percent estimate.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the strength in business investment has likely extended into the current quarter, lending support to the economy.
In its second estimate of growth for last quarter, the government said companies' restocking of supplies contributed less than it had first estimated. But a higher trade deficit subtracted less from growth than initially estimated.
The downward revision in inventory building will likely help boost growth in the current quarter because it means that businesses may need to restock their supplies to meet demand.
With the wild swing between the first quarter's sharp slump and the vigorous rebound last quarter, annual economic growth has averaged a meager 1.1 percent for the first six months of this year.
Because of the rocky start, economists think growth for all of 2014 will average just 2.1 percent, little changed from last year's 2.2 percent increase.
They are more optimistic about 2015. Many expect growth to accelerate to 3 percent, an indication that the economy is finally gaining cruising speed after the deep 2007-09 recession, the worst since the 1930s. The recession officially ended in June 2009 and over the past five years, the economy has turned in subpar growth rates averaging about 2 percent a year.
“I am looking for 2015 to be a better year, assuming geopolitics don't get in the way,” said Sung Won Sohn, an economics professor at California State University, Channel Islands. Economists worry that any of several political hot spots — from Ukraine to Israel to Iraq — could erupt in a way that would destabilize U.S. and global growth.
But Sohn said numerous factors should support growth in the second half of this year and in 2015. The principal strength is expected to come from further improvement in the job market.
In July, employers added 209,000 jobs, the sixth straight month of solid 200,000-plus job growth. Those gains have averaged 244,000 a month since February, the best six-month string in eight years.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- PPG’s new CEO to push organic growth with existing clients
- Judge rules against PPG in lawsuit over pollution
- Idea Foundry CEO Matesic decides which new companies get help from his Pittsburgh business incubator
- ‘Cadillac tax’ hangs over insurance costs
- Steelworkers union says ATI talks to resume
- Pittsburgh unemployment rate steady as job market shrinks
- Comcast sets digital sights on millenials
- Sniffer lets PixController detect methane gas leaks
- ModCloth gets physical
- Protecting your identity from hackers
- America picks up China’s slack in auto sales