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| US economy bounces back with 4% GDP growth in second quarter | US economy bounces back with 4% GDP growth in second quarter |
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| The US economy bounced back strongly in the spring, shaking off the effects of an unusually harsh winter, the Commerce Department said on Wednesday. | The US economy bounced back strongly in the spring, shaking off the effects of an unusually harsh winter, the Commerce Department said on Wednesday. |
| Gross domestic product, the broadest measure of the economy, grew by 4% on an annual basis, better than the average of 3% predicted by economists. In the first three months of the year the economy shrank by 2.1%, the Commerce Department announced, softening its first estimate of a 2.9% fall. | Gross domestic product, the broadest measure of the economy, grew by 4% on an annual basis, better than the average of 3% predicted by economists. In the first three months of the year the economy shrank by 2.1%, the Commerce Department announced, softening its first estimate of a 2.9% fall. |
| Annual revisions also released on Wednesday show the economy grew by 4% in the second half of 2013, its fastest pace of growth in a decade. | Annual revisions also released on Wednesday show the economy grew by 4% in the second half of 2013, its fastest pace of growth in a decade. |
| Despite the good news the economic recovery remains the weakest since the second world war. GDP has grown by just 1% in the first six months of the year. The pick up in the economy in late 2013 was wiped out by one of the harshest winters on record and even at 4% the pace of recovery remains sluggish. | Despite the good news the economic recovery remains the weakest since the second world war. GDP has grown by just 1% in the first six months of the year. The pick up in the economy in late 2013 was wiped out by one of the harshest winters on record and even at 4% the pace of recovery remains sluggish. |
| The Commerce Department said the increase in GDP in the second quarter reflected growth in consumer spending, private inventory investment, exports, nonresidential fixed investment, state and local government spending and residential fixed investment. | The Commerce Department said the increase in GDP in the second quarter reflected growth in consumer spending, private inventory investment, exports, nonresidential fixed investment, state and local government spending and residential fixed investment. |
| The figures come as the Federal Open Markets Committee concluded its latest two-day meeting. The Fed announced another $10bn cut to its monthly quantitative easing (QE) economic stimulus programme. It is now buying $35bn of Treasury and mortgage backed securities a month in an attempt to keep rates low and spur investment. The plan is to finish the programme by the end of the year. | |
| “Labor market conditions improved, with the unemployment rate declining further. However, a range of labor market indicators suggests that there remains significant underutilization of labor resources,” the Fed said in a statement. | |
| “The bottom line for today’s report is that it validates the ‘one off’ thesis pertaining to Q1 and as such, we hold to our current view that the economy will expand by 3.0% or so in the back half of the year, interest rates should drift higher and the Federal Reserve will feel vindicated in exiting the asset purchase program,” Dan Greenhaus, chief strategist at broker BTIG wrote in a note to investors. | “The bottom line for today’s report is that it validates the ‘one off’ thesis pertaining to Q1 and as such, we hold to our current view that the economy will expand by 3.0% or so in the back half of the year, interest rates should drift higher and the Federal Reserve will feel vindicated in exiting the asset purchase program,” Dan Greenhaus, chief strategist at broker BTIG wrote in a note to investors. |
| On Friday, the Bureau of Labour Statistics releases its latest closely watched tally of new jobs added to the economy. Last month the BLS said the US had added 288,000 jobs to the nonfarm payrolls report in June and unemployment fell to 6.1%, its lowest rate since September 2008. | On Friday, the Bureau of Labour Statistics releases its latest closely watched tally of new jobs added to the economy. Last month the BLS said the US had added 288,000 jobs to the nonfarm payrolls report in June and unemployment fell to 6.1%, its lowest rate since September 2008. |
| ADP, the America’s largest payroll supplier, released its latest monthly jobs poll on Wednesday. The report found private sector employment increased by 218,000 jobs from June to July, the fourth straight month of job gains above 200,000 but lower than the 281,000 jobs added in the last report. | ADP, the America’s largest payroll supplier, released its latest monthly jobs poll on Wednesday. The report found private sector employment increased by 218,000 jobs from June to July, the fourth straight month of job gains above 200,000 but lower than the 281,000 jobs added in the last report. |
| Mark Zandi, chief economist of Moody’s Analytics, which helps compile the ADP report, said: “The July employment gain was softer than June, but remains consistent with a steadily improving job market. At the current pace of job growth unemployment will quickly decline. Layoffs are still receding and hiring and job openings are picking up. If current trends continue, the economy will return to full employment by late 2016.” | Mark Zandi, chief economist of Moody’s Analytics, which helps compile the ADP report, said: “The July employment gain was softer than June, but remains consistent with a steadily improving job market. At the current pace of job growth unemployment will quickly decline. Layoffs are still receding and hiring and job openings are picking up. If current trends continue, the economy will return to full employment by late 2016.” |