GDP increased at a 2.2 percent pace in the first quarter. The Atlanta Fed is forecasting a 4.4 percent acceleration in the third quarter, though CNBC’s Rapid Update survey of economists sees a less robust but still strong reading of 3.3 percent.
Economists see growth slowing in the current quarter due to a drag from trade brought about by the tariff battles between the U.S. and China. The drag could be a full percentage point after trade added 1.2 percentage points in the second quarter due to a rush in soybean purchases ahead of the tariffs.
An indicator of what’s ahead in the third quarter came at the same time Thurday, with U.S. durable goods orders in August jumping 4.5 percent against expectations of just 2 percent. Durables rose 8.6 percent in the second quarter after a 2 percent decline in the earlier three-month period. However, most of the jump came in aircraft orders. Underlying orders were not nearly as robust.
The reading comes as the economy seems to be firing on nearly all cylinders, with a sluggish housing being the lone exception. Consumer confidence recently hit an 18-year high, small business optimism is also around record highs and corporate profit increases have been running at 25 percent this year.
Citing a stronger economy, the Federal Reserve on Wednesday approved another quarter-point hike in its benchmark interest rate.
Second-quarter growth was fueled by higher spending in both the public and private sectors as well as business investment. Imports fell well exports were higher. The gains were partially offset by a decline in private inventory investment.
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