Revised Data Lifts US GDP to 3.8% in the Second Quarter

The US economy grew more strongly in the second quarter than expected, following an upward revision of consumer spending data.  GDP expanded at an annualized rate of 3.8% through the end of June, higher than the earlier estimate of 3.3%. At the same time, first-quarter growth was revised down to a 0.6% contraction.

 According to the — "Financial Times"

Consumer spending was the main driver of the stronger performance, rising 2.5% compared with 1.6% in the previous estimate. Transportation, financial services, and insurance contributed to the gains, though exports were revised lower. The updated figures came shortly after the Federal Reserve cut interest rates for the first time this year, citing weakness in the labor market.

Despite the GDP upgrade, analysts believe the data will have little effect on Federal Reserve policy. Job creation slowed sharply over the summer, yet initial jobless claims declined, suggesting conditions may be less severe than feared. Markets reacted with a drop in the S&P 500 index and a rise in US Treasury yields.