The US economy grew at its fastest pace in almost four years in the second quarter, as consumers shrugged off trade war uncertainties and opened their wallets.
Gross domestic product rose at an annual rate of 4.2 per cent in the three months to June 30, the third and final reading from the commerce department showed on Thursday.
The figure was in line with Wall Street expectations and marked the fastest growth rate recorded since the third quarter of 2014, when the US economy expanded at an annual rate of 4.9 per cent. It also marked an acceleration from the first quarter of 2018 when the US economy grew at an annual rate of 2.2 per cent.
The second-quarter performance came thanks to surges in consumption and business investment. Consumer spending rose by 3.8 per cent during the quarter, bouncing back from the 0.5 per cent rise recorded during the first quarter.
A separate report also showed durable goods orders, which are seen as a proxy for business investment, rising by the most in six months. The gauge jumped 4.5 per cent, or $11bn, to $259.6bn in August from the previous month. That’s more than twice the 2 per cent rise the market had expected and follows a 1.2 per cent increase in July.
However, analysts cautioned that the strong second quarter numbers reflected one-time factors that would be hard to replicate through the rest of this year, particularly as the US steps up its trade dispute with its major trading partners and the Fed remains on track to raise rates one more time this year to prevent the economy from overheating.
The core PCE price index, which strips out volatile energy and food prices and is the Fed’s preferred measure of inflation, was revised slightly higher to 2.1 per cent in the second quarter.
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