The U.S. economy expanded at a faster pace in the second quarter as a smaller trade deficit and gains in inventories overshadowed the effects of federal budget cutbacks.
Gross domestic product rose at a 2.5 percent annualized rate, up from an initial estimate of 1.7 percent, Commerce Department figures showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg projected a 2.2 percent gain.
The improvement is consistent with projections that the U.S. has been able to weather the fallout of government budget cuts and higher taxes and is poised to pick up once those restraints fade. Gains in employment and home prices that are shoring up confidence signal households will sustain spending, the biggest part of the economy.
“We will get stronger growth in the second half,” Sam Coffin, an economist at UBS Securities LLC in Stamford, Connecticut, said before the report. UBS is the top forecaster of GDP in the past two years, according to data compiled by Bloomberg. “Household spending growth is helping the economy. The drag from the government sector is going to be out of the way.”
The number of Americans filing applications for unemployment benefits dropped last week, a sign that the labor market continues to make progress, another report today showed. Jobless claims in the week ended Aug. 24 declined 6,000 to 331,000 from 337,000 the week before, according to figures from the Labor Department. The decrease was in line with the median forecast of 50 economists surveyed by Bloomberg that called for a drop to 332,000.
@Bloomberg.com
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