27th August 2015
The US economy expanded by more than initially thought in the second quarter, official figures show.
In its second estimate, the US Department of Commerce, said that GDP increased at an annual rate of 3.7% between April and the end of June, up from an initial prediction of 2.3%.
Higher exports, strong consumer and government spending were cited as the main reasons behind the boost.
In a statement the Commerce Department said the increase in real GDP in the second quarter reflected positive contributions from “personal consumption expenditures, exports, state and local government spending, non-residential fixed investment, residential fixed investment, and private inventory investment”.
Commenting on the news, Paul Ashworth chief US economist at Capital Economics said: “This creates something of a dilemma for the Fed because back in June officials were split on whether to raise rates once, twice or even three times this year, even when they were forecasting that GDP growth would be as low as 1.8% to 2.0%.
“It is now more likely to be somewhere between 2.0% to 2.5%. Yet because of the recent global stock market wobble, officials have found another excuse to delay raising interest rates. We don’t think a September rate hike is completely off the table, but we’ll just have to wait and see what officials have to say at this weekend’s Jackson Hole gathering.”