US GDP Growth Revised Up To 3.8% In Q2 Driven By Strong Consumer Spending

The U.S. economy grew at an annualized rate of 3.8% in the second quarter, the Commerce Department reported Thursday in its third and final estimate. 

The figure is up from 3.3% in the previous estimate and well above the 3% initially reported. The Bureau of Economic Analysis (BEA) attributed the gain primarily to a decline in imports and a sharp increase in consumer spending. Personal consumption expenditures rose at a 2.5% annualized pace, up from 1.6% in the second estimate. These positive contributions were partly offset by decreases in investment and exports.

Real final sales to private domestic purchasers, which combine consumer spending and gross private fixed investment, increased 2.9%, revised up one percentage point from the prior estimate. The BEA noted that the upturn from the first quarter reflected stronger consumer demand and weaker imports, which outweighed slower investment and export activity.

The GDP report comes as the labor market showed resilience. Weekly jobless claims fell by 14,000 to 218,000 in the week ended September 20, below the 235,000 forecast by economists. Continuing claims, which measure the total number of Americans receiving unemployment benefits, rose slightly to 1.92 million, still below expectations.

The U.S. stock market fell in morning trade on Thursday. The SPDR S&P 500 ETF (SPY) was down 0.41%, the SPDR Dow Jones Industrial Average ETF (DIA) slipped 0.15%, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) moved 0.55% lower. 

If losses hold, this would mark a third day of decline for the S&P 500. However, retail sentiment around SPY on Stocktwits remained in ‘bullish’ territory over the past day. Meanwhile, retail sentiment around QQQ fell to ‘bearish’ from the ‘neutral’ zone.

Read also: U.S. Jobless Claims Fall To 218,000 Last Week

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