Economic Growth Reached 3 Percent in Second Quarter Rebound

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The U.S. economic rebound in the second quarter was stronger than initially reported.

"We expect Harvey to slow GDP growth by anywhere between 0.1 and 0.4 percentage points, with Q3 growth likely to come in in the 2.5 percent to 3.0 percent range given current tracking", added TD Economics.

It also represents a significant bounce from the anemic 1.2 percent growth rate reported for the first quarter of 2017.

Trump frequently touts good economic news and accuses the media of failing to cover it. This was above the consensus expectation of a rise of 2.7 percent.

Economists are also estimating how Hurricane Harvey could affect third-quarter growth.

The upward revision to consumption reflects spending on wireless-phone services, used cars and electricity and natural gas, according to the report. Even with the upward revision, the weak start to the year means that growth over the past six months has averaged 2.1%, the same modest pace seen for the recovery that began in mid-2009.

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The Commerce Department issues its second look at the performance of the overall economy for the April-June quarter.

Analysts are looking for a pickup in activity for the second half of this year and an even faster growth in 2018 if Trump is successful in getting parts of his economic program passed by Congress. But net exports are expected to weigh more the growth, with refined product exports hard hit given the outages of Gulf Coast refineries and ports shuttered.

The Trump administration has pledged to return the world's largest economy to sustained annual growth of three percent or more by slashing taxes and regulations while boosting trade.

"Underlying domestic demand in the economy is consistent with near three percent growth but the supply-side of the economy is not capable of delivering such a pace of growth at this point", John Ryding, chief economist at RDQ Economics in NY, told CNBC.

"Soft inflation is raising questions over whether the Fed will go ahead with another interest-rate hike this year", MarketWatch noted.

"The increase in real GDP in the second quarter reflected positive contributions from [Personal Consumption Expenditures], nonresidential fixed investment, exports, federal government spending, and private inventory investment that were partly offset by negative contributions from residential fixed investment and state and local government spending", the report said. That would mark an improvement over a year ago when the economy grew a meagre 1.5 per cent, the poorest showing since 2009 when GDP shrank by 2.9 per cent. Still, the subdued inflation figures continue to be a constraint at this point.

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