- Stuart Hoffman, chief economist at PNC Financial Services
The US economy grew more than previously estimated in the second quarter, supported by robust consumer and business spending. The world's number one economy expanded at an annual rate of 3.7% in the April-June quarter, more than a percentage point greater than the 2.3% originally estimated, according to the Commerce Department. It was the strongest growth since last summer and marked a great improvement from the anaemic 0.6% increase during the January-March quarter when a harsh winter undermined activity. Economists believe growth has slowed in the current quarter to around 2.5%. Some have expressed concern that shrinking global stock markets and a steep slowdown in China will further weaken the economy in coming months. The revision for second quarter growth reflected an advance in consumer spending, which rose at annual rate of 3.1%, up from a 1.8% growth rate in the first quarter. Business investment in structures and equipment was revised higher to show growth of 3.2%, while housing construction was revised up to a surge of 7.8%.
A separate report showed the number of Americans applying for first-time jobless benefits dropped last week, suggesting the labour market remains healthy. Initial jobless claims declined by 6,000 to a seasonally adjusted 271,000 in the week ended August 22, the Labor Department said. The drop comes after four consecutive weekly increases.
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