WASHINGTON – U.S. economic output grew at a 3.1% annual rate in the second quarter, slightly stronger than previously thought and marking the best growth in two years.
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The estimate, based on revised data released by the Commerce Department on Thursday, replaces a previous tally of 3% growth. Economists surveyed by The Wall Street Journal had expected the estimate to remain 3%.
The agency said stronger business spending -- mainly in the form of farmers decreasing their stockpiles less than previously thought -- led to the upward revision.
The report did little to alter the picture of an economy that rebounded in the spring after a lackluster winter and then lost momentum in recent months after hurricanes tore into Texas and Florida.
Many private-sector economists estimate economic output fell back to a rate of between 1% and 2% in the third quarter. They expect growth to rebound in the year's final months and early next year as hurricane-hit communities rebuild, consumers and businesses step up spending broadly and the global economy gains traction.
"It will take more than one quarter of growth exceeding 3% to conclude that a stronger growth trajectory can be sustained, particularly in the absence of any meaningful fiscal stimulus as the [Federal Reserve] continues to gradually withdraw monetary support," Jim Baird of Plante Moran Financial Advisors said in a note to clients. "There's nothing in today's report that moves the needle in terms of the big picture."
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The economy at its core remains stable, as steady job growth and a booming stock market encourage households to spend. Consumers, accounting for more than two-thirds of economic demand, increased spending at a 3.3% rate in the second quarter.
Businesses also spent steadily. Nonresidential fixed investment -- a measure of business spending on equipment, software and commercial space -- grew at a 6.7% rate in the spring, slightly lower than previously thought but marking the second consecutive quarter of solid growth.
Exports grew at a 3.5% rate, a slightly downward revision and about half the prior quarter's rate. But the increase reflected a healthy development as stronger growth around the global boosts business at U.S. manufacturers.
Thursday's report also showed corporate profits were weaker than previously thought in the spring. After-tax profits, without inventory valuation and capital consumption adjustments, dropped 2% from the first quarter instead of the previously reported 1.4%. Profits were still 7.4% higher from a year earlier.
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(END) Dow Jones Newswires
September 28, 2017 10:42 ET (14:42 GMT)