Amidst the negative economic news from China, the US economy grew close to 4 per cent in the second quarter, higher than market expectations, signaling a positive sign for North American economic growth.
The latest economic data from the US for the country’s second quarter GDP saw a 3.7 per cent annualized increase from teh 2.3 per cent gain reported in advance estimates. Market expectations had been for a smaller upward revision of 3.2 per cent in the second quarter.
According to Josh Nye, an economist with RBC Economics, “the upwardly revised second-quarter gain indicated an even stronger rebound in activity following a disappointing 0.6 per cent annualized increase in the first quarter.”
He says that the return to growth above expectations “supports the assumption that the slowdown earlier this year was largely due to transitory factors, including harsh winter weather and a labour dispute at west coast ports rather than underlying moderation in activity. The US economy appears to have significant momentum, as a solid labour market, strong consumer confidence, and low interest rates continue to fuel growth in consumer spending and housing activity. Business investment, which appeared soft in the first half of 2015 based on earlier estimates, was revised higher in the second quarter and looks set to make a solid contribution to growth in the third quarter following July’s strong durable goods report. We expect broad-based strength in domestic demand to keep the US economy growing at an above-trend pace during the second half of 2015. While this economic backdrop would warrant the Fed beginning to withdraw monetary policy stimulus in September, recent turmoil in financial markets could keep the central bank on the sidelines.”