Pleasant news this morning as the U.S. Department of Commerce announced a more robust 2.6% boost to GDP during the second quarter, outpacing more dire predictions of 1.6 to 1.9%. From Marketwatch:
The U.S. grew at a 2.6% annual pace in second quarter, rebounding from soft patch at the start of the year. Consumer spending, the main engine of the economy, led the way with a 2.8% increase, according to Commerce Department data. Business investment in equipment rose 8.2%, while outlays on structures advanced 4.9%. In a bit of a surprise, the value of inventories fell slightly to mark the second decline in a row. Investment in new housing also sank 6.8%. Exports rose 4.1% and imports edged up 2.1%. Inflation as measured by the PCE price index increased at a 0.3% annual rate. First-quarter GDP was revised lower to 1.2%.
There’s a lot of silver lining in this cloud, even though GDP targets are still far off of the 3.2% generally required to define expansion in the U.S. economy. Consumer spending numbers are an excellent sign, and business investment in equipment rising a stiff 8.2% means that small businesses are finally beginning to feel confidence.