The U.S. economy grew faster than initially thought in the second quarter, notching its quickest pace in more than two years, and there are signs that the momentum was sustained at the start of the third quarter.
Gross domestic product increased at a 3.0 percent annual rate in the April-June period, the Commerce Department said in its second estimate on Wednesday. The upward revision from the 2.6 percent pace reported last month reflected robust consumer spending as well as strong business investment.
Growth last quarter was the strongest since the first quarter of 2015 and followed a 1.2 percent pace in the January-March period. Economists had expected that second-quarter GDP growth would be raised to a 2.7 percent rate.
Retail sales and business spending data so far suggest the economy maintained its stamina early in the third quarter. Other data on Wednesday showed private employers ramped up hiring in August, adding 237,000 jobs to their payrolls. That was up from 201,000 jobs in July.
The ADP National Employment Report was released ahead of the government’s more comprehensive employment report on Friday, which is expected to show solid job gains in August and diminishing labor market slack.
The dollar extended gains versus a basket of currencies on the data, while prices for U.S. Treasuries fell. U.S. stock index futures trimmed gains.
Strong growth and a labor market that is near full employment support views the Federal Reserve will lay out a plan to start unwinding its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities next month and increase interest rates in December.
With GDP quickening in the second quarter, the economy grew 2.1 percent in the first half of 2017. That was up from the 1.9 percent reported last month.
Republican President Donald Trump has set an ambitious 3.0 percent growth target for 2017, to be achieved through a mix of tax cuts, deregulation and infrastructure spending.
The Trump administration has so far failed to pass any economic legislation and is yet to articulate plans for tax reform and infrastructure. Chances are slim that the Republican-controlled U.S. Congress will debate and pass tax reform legislation before the end of the year.
So far, the political gridlock in Washington has not hurt either business or consumer confidence.