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Second quarter GDP better than expected – but economy still in slow gear

New GDP numbers for April through June show the economy growing by 1.7 percent – an unexpected jump. That could lead the Federal Reserve to ease up on its stimulus program.

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Jeff Caldwell checks a vehicle on the assembly line at the Chrysler Jefferson North Assembly plant in Detroit earlier this year.The Commerce Department issued its first estimate of how fast the US economy grew in the April-June quarter on Wednesday.

Paul Sancya/AP/File

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The US economy grew at a 1.7 percent annual pace in the second quarter – a welcome acceleration that many forecasters didn’t expect.

It’s a sign that businesses are investing more and consumers are spending more, despite tax hikes that took effect at the beginning of the year.

The nation’s gross domestic product, or GDP, had grown at a rate of just 1.1 percent in the first quarter and 0.1 percent in last year’s final quarter.

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The positive report from the US Commerce Department was matched Wednesday by a sign of progress in the troubled European economy as well, where the number of people unemployed fell for the first time since April 2011.

Investors responded by pushing up stock prices, with the Standard & Poor’s 500 index up about 0.5 percent for the day by the middle of the trading session.

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