USA economy grew 4.2 per cent in second quarter, faster than first reported

WASHINGTON: The roaring growth recorded by the United States of America (USA) economy in the second quarter was even faster than first reported, with new numbers showing a bigger boost in corporate spending, the government reported today.nnThe uptick in estimates of second quarter spending by companies was sure to comfort President Donald Trump and supporters of December’s sweeping corporate tax cuts who argue that lowering corporations’ tax burdens will spur investment and growth.nnGross Domestic Product advanced at an annual rate of 4.2 per cent in the April-to-June period, a tenth of a point faster than initial estimates showed last month and still the fastest growth in almost four years, according to the Commerce Department.nnEconomists had been expecting a slight downward revision.nnMany economists view the second quarter growth as a blip, juiced by one-off factors unlikely to be sustainable, and estimates for growth in the third quarter now hover around a still-robust three per cent.nnBut Trump last month hailed the economy’s renewed vigor, claiming credit for boosting growth above all with tax cuts and by aggressively confronting trading partners.nnStill, much of the second-quarter boom was due to a boost in exports as merchants raced to buy American goods — principally soybeans and petroleum — ahead of China’s retaliatory tariffs that took effect in July. The pendulum is expected to swing in the other direction in coming months.nnCorporate profits rose USD 72.4 billion, up from USD 26.7 billion in the first quarter when many companies reported one-time accounting charges due to changes in the tax laws.nnGrowth is trending higher in the world’s largest economy this year, putting Trump’s annual growth target of three percent within reach.nnMuch of the upward revision in spending by companies reflected investment in computer software, according to the department. Meanwhile, estimates for the value of imports, notably petroleum, fell and federal and local government spending moved up.nnThe new estimate was based on a more complete set of data than previously available and will be revised again next month.nnUS defense spending also rose six percent for the quarter, the biggest increase in nine years, five tenths of a percentage point faster than previously estimated.nnThese gains offset what officials described as “widespread” downward revisions to consumer spending, with small subtractions from purchases of cars, furniture and gasoline, among other items.nnDownward revisions in the housing sector, which has suffered declining sales and construction this year, also weighed on the outcome. With budget deficits ballooning, the White House is betting on faster growth to help offset the cost of the tax cuts, which economists say is unlikely.nnSource: AFP