Gross domestic product has increased at a 4.2 percent annualised rate, the Commerce Department said today, in its second estimate of GDP growth for the April-June quarter.
That was slightly up from the 4.1 percent pace of expansion it reported in July and was the fastest rate since the third quarter of 2014.
Businesses spent more on software than previously estimated in the second quarter and the nation also imported less petroleum.
Stronger business spending and a smaller import bill offset a small downward revision to consumer spending.
Compared to the second quarter of 2017, the economy grew 2.9 percent instead of the previously reported 2.8 percent.
Output expanded 3.2 percent in the first half of 2018, rather than 3.1 percent, putting the economy on track to hit the Trump administration’s target of 3 percent annual growth.
An alternative measure of economic growth, gross domestic income (GDI), increased at a 1.8 percent rate in the second quarter.
That was a moderation from the first quarter’s brisk 3.9 percent pace.
The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, increased at a 3.0 percent rate in the April-June period.
That followed a 3.1 percent growth pace in the first quarter.
But the robust growth in the second quarter is unlikely to be sustained given the one-off drivers such as a $1.5 trillion tax cut package, which provided a jolt to consumer spending after a lackluster first quarter, and a front-loading of soybean exports to China to beat retaliatory trade tariffs.
While consumer spending has remained strong early in the third quarter, the housing market has weakened further with homebuilding rising less than expected in July.
Sales of new and previously owned homes are also declining, today’s report revealed.
The Trump administration’s “America First” policies, which have led to an escalation of a trade war between the United States and China as well as tit-for-tat tariffs with the European Union, Canada and Mexico, pose a risk to the economy.
Economists had expected second-quarter GDP growth would be revised down to a 4.0 percent pace. The economy grew at a 2.2 percent rate in the January-March period.