Gains in consumer spending and business investment helped the U.S. economy rebound more than forecast in the second quarter following a slump in the prior three months that was smaller than previously estimated, according to the Bureau of Labor Statistics.
Gross domestic product rose at a 4 percent annualized rate, the most since the third quarter of 2013, after shrinking 2.1 percent from January through March, Commerce Department figures showed. Consumer spending, the biggest piece of the economy, rose 2.5 percent. Companies added 218,000 workers to payrolls in July, exceeding the average for the year and showing improving demand is bolstering the job market, a private report showed today. The gain this month followed a 281,000 increase in June that was the strongest since November 2012.
The updated data showed worker pay was a smaller piece of overall growth than earlier estimated as some Americans reaped significantly more in interest and dividend payments over the past two years. The report also showed the economy expanded more slowly over the past three years, only picking up momentum going into 2014. The increase in household consumption, which accounts for almost 70 percent of the economy, exceeded the 1.9 percent median forecast and followed a 1.2 percent advance in the first three months of 2014. Purchases added 1.7 percentage points to growth.
Purchases of durable goods, including autos, furniture and appliances and recreational vehicles, jumped at a 14 percent annualized rate, the most since the third quarter of 2009, when the recovery began.