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US economy grows by 2.6% in second quarter


The US economy grew by 2.6% in the second quarter compared to 1.2% in the first, according to Commerce Department figures.

The latest growth was mainly put down to a recovery in consumer spending, following a slow performance during the winter.
Consumer spending makes up more than two-thirds of the American economy and it grew at a rate of 2.8% during the second quarter, up from the 1.9% of the previous quarter.
Defence spending by the government rose at the fastest pace in six years at 5.2%.
President Donald Trump campaigned on a promise of tax cuts and regulatory relief which he hoped would boost annual growth by 4% or better.
But his economic programme has not moved forward in Congress.
There are also fears that, as annual wage growth struggles to get above 2.5%, consumer spending will once again come under pressure.
Business spending was up by 8.2% in the second quarter, the best result since the third quarter of 2015 and the third consecutive increase.

Trade contributed 0.18% to the growth figure but housing contracted at 6.8%, its worst performance since the third quarter of 2010.
Meanwhile, growth for the first quarter was revised down to 1.2% instead of the previously reported 1.4%.
On news of the 2.6% growth, the dollar fell against a number of currencies but prices for US government bonds were up.
Ranko Berich, head of market analysis at Monex Europe, said: “The US economy remains in growth, but there’s very little sign of inflationary risk in today’s GDP data.
“Between Fed caution and the ongoing efforts of the various branches of the Government to make political satire redundant, it’s difficult to get optimistic about rates or USD off the back of today’s release.”
Oliver Kolodseike, senior economist at the Centre for Economics and Business Research in London, said: “Despite the welcome rebound in GDP growth, it seems inevitable that the current US administration will miss its growth target of around 3% in 2017, given how little progress has been made so far in implementing tax reforms, loosening regulation and boosting infrastructure spending.
“CEBR expects the US economy to grow only slightly above the 1.5% rate recorded last year.”

Source: Sky

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