United States economy accelerated during first full Trump quarter

The Commerce Department said the US economy grew at a healthy 2.6% annualized pace in the second quarter, matching the gross domestic product (GDP) forecast. The Bureau of Economic Analysis reports that second-quarter GDP increased at an annualized rate of 2.6% over Q1, which had only managed 1.2% annualized quarter-on-quarter growth. However, spending on housing investment was notably weak, declining by 6.8%.

The economy also benefited during the second quarter from increased federal government spending.

The Trump administration has pledged to push the economy to three percent growth or higher - which officials say will pay for deep proposed tax cuts - but most economists says this is unrealistic.

But business stockpiling was a slight drag on growth after substantially adding to gains in the first quarter.

On an annual basis, French GDP grew by 1.8% - again, slightly faster than Britain's 1.7% year-on-year growth.

The Commerce Department also released its annual revisions of the past two years worth of GDP data.

All of the changes boosted growth a slight 0.1 percentage point over the three-year period.

Consumer spending jumped by 2.8% in the second quarter compared to the 1.9% increase in the first quarter. The core is similar, at 1.1% and down from 2.4% in the first quarter.

The US economy grew by 2.6% in the second quarter boosted by consumer spending, according to official data published on Friday (28 July).

"While the blow-out headline advance no doubt exaggerates the underlying strength in growth, the fact is that every single major surprise for the economy this year has been to the upside", Porter said.

The Canadian dollar added to gains against the greenback immediately after the report, while traders increased their bets of another interest rate hike from the Bank of Canada, which earlier this month raised rates for the first time in almost seven years.

The increase in output was in line with economists' expectations.

With a solid labor market keeping household spending in the driver's seat and business investment and trade providing further help, demand looks set to expand around the rate it's pretty much been growing.

  • Eleanor Harrison