The Bureau of Economic Analysis said that the U.S. economy grew by an annualized 2.6 percent in the second quarter, according to preliminary data. In addition, it revised first quarter growth down from 1.4 percent to 1.2 percent. As a result, the real GDP increased by 1.9 percent at the annual rate in the first half of 2017. For the year a whole, I am currently predicting real GDP growth of 2.2 percent, with 2.6 percent growth for the current third quarter. This is not far from the 2.1 percent average growth rate seen since the Great Recession, but I continue to believe that there is upward potential in the forecast, especially for 2018, if pro-growth policies are enacted.
Looking at the underlying data, consumer and business spending were the bright spots, with net exports also making a positive contribution for the second straight quarter. Personal consumption expenditures rose by 2.8 percent in the second quarter, accelerating from the 1.9 percent pace seen in the first quarter on an increased willingness to purchase goods. Along those lines, durable goods spending was marginally negative in the first quarter with consumers more cautious, but jumped 6.3 percent at the annual rate in the second quarter. With that said, spending on motor vehicles remained soft. Nondurable goods spending was also stronger, up 3.8 percent in the second quarter. Overall, personal spending contributed 1.93 percentage points to the top-line growth figure of 2.6 percent, including 1.02 percent from goods spending. Read More