US economy surges at 3.7pc rate

Washington, August 27

The US economy posted a much bigger rebound in growth during the spring than previously reported, thanks to improvements in a number of areas like consumer spending and business investment.

The economy expanded at an annual rate of 3.7 per cent in April to June quarter, more than a percentage point greater than 2.3 per cent originally estimated, the Commerce Department reported today.

It was the strongest growth since last summer and marked a sharp improvement from the anaemic 0.6 per cent advance during the January to March quarter when a harsh winter sapped activity.

Analysts believe growth has slowed a bit in current quarter to around 2.5 per cent. Some have expressed concern that shrinking global stock markets and a sharp slowdown in China will further weaken the economy in coming months.

Revision for second quarter growth reflected a boost in consumer spending, which grew at annual rate of 3.1 per cent, up from a 1.8 per cent growth rate in first quarter.

Business investment in structures and equipment was revised higher to show growth of 3.2 per cent, while housing construction was revised up to a gain of 7.8 per cent.

Also fuelling growth were strong gains in state and local government spending and business restocking of store shelves. Rise in inventories, however, could act as a drag in the current quarter if businesses cut back on ordering because of concerns they have too many unwanted goods.

Source : THT