US economy posts solid 2.3 percent growth rate in Q2

As part of its overhaul, the government also released a pair of new tools to help better understand how fast the economy is growing.

“The U.S. economy bounced back in the second quarter, as expected, and revisions show that it expanded in the first quarter, rather [than] the contraction that the BEA previously estimated”, Joseph Lake, global economist at The Economist Intelligence Unit, wrote in a research note Thursday. Sweet thinks that the 2.6 increase is enough to fill the current gaps in the economy. Thursday’s report showed those a few of those pressures may be starting to ease.

The second quarter has brought an increase in U.S economic growth as consumer spending and housing equalize the trade and energy sector.

Currency movements have pushed up the cost of American-made goods for customers overseas, while foreign products are cheaper in the US. In the second quarter, consumer spending rose 2.9 percent, compared to last quarter’s 1.8 percent increase.

Total economic output, also known as gross domestic product, increased at a 0.6% annualized rate from January through March, the Commerce Department said in its final estimate for the quarter.

Q2’15 US growth ticked higher from Q1’15, but still missed expectations coming in at +2.3% versus the +2.5% estimate set forward by Bloomberg News. The personal consumption expenditures price index is forecast to have rebounded at a 2.0 percent rate after falling by the same margin in the first quarter.

Harsh winter weather and West Coast labor disputes caused a slowdown in activity in the first quarter, and cutbacks in oil exploration and drilling in the wake of plunging crude prices also hurt the economy. Consumption growth will likely be slower in the second half of the year, with investment likely to be somewhat stronger.

But the government lowered estimates for 2011 to 2014, revealing that growth in that period was somewhat weaker.

The second quarter probably marked the low point as energy costs have stabilised which means spending on oilfield infrastructure will become less of a drag on the economy.

On the negative side, real inventory accumulation was still $110 billion in 2Q2015.

Economists are looking for growth to strengthen more in the second half of this year to around 3 percent as consumer spending is bolstered by sizable employment gains. Ahead of Thursday’s GDP release, for example, Macroeconomic Advisers was predicting a 2.7 per cent pace in the third quarter. While there have been highs and lows in individual quarters, overall the economy has failed to break out of its roughly 2% pattern for six years.

Economists believe that the latter is true-that the top speed for the U.S. economy has come down by more than previously thought.

Fed officials on Wednesday upgraded their assessment of the job market and housing market, a sign that the central bank remains on track to raise interest rates later this year.

These contributions to the increase in real GDP were partly offset by decreases in federal government spending, inventory investment, and business investment.

Government spending was up by 0.8% in the second quarter.