- Jim Baird, chief investment officer for Plante Moran Financial Advisors
US economic growth accelerated in the April-June quarter as an increase in consumer spending offset the drag from weak business spending on equipment. The US GDP rose a 2.3% annual rate, according to the Commerce Department, while the first-quarter economic output was revised to show a growth of 0.6%, up from a negative 0.2%. The revision to first-quarter growth reflected steps taken by the government to refine the seasonal adjustment for some components of GDP, which economists said left residual seasonality in the data, as well as new source data. Growth in the second quarter was boosted by consumer spending, which grew at a 2.9% rate from a downwardly revised 1.8% pace in the first quarter. Earlier this week the Fed described the economy as growing "moderately", while revising its view of the labour market upwards and saying housing had shown "additional" improvement. The Fed's assessment left the door open for a possible interest rate hike in September, which would be the first rise since 2006.
Meanwhile, the number of US workers applying for jobless benefits last week increased from a four-decade low, but the broader trend indicates the labour market is strengthening. Initial jobless claims rose by 12,000 to a seasonally adjusted 267,000 in the week ended July 25, the Labor Department said. The four-week moving average of claims, which smooths week-to-week volatility, declined 3,750 to 274,750 last week.
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