US economy grew 3% in second quarter: Commerce Dept

(FILES) This file photo taken on March 23, 2017 shows a view of the US Capitol dome on Capitol Hill in Washington,DC. The top 'AAA' long-term debt rating of the United States will be in danger if lawmakers do not raise borrowing limits in a timely fashion, ratings agency Fitch warned on August 23, 2017. Congress faces looming deadlines to approve spending for 2018 and raise legal limits on the amount the United States can borrow in order to meet immediate funding obligations -- raising the prospect that the US could default on its sovereign debt for the first time ever and cause havoc on global markets. / AFP PHOTO / Brendan Smialowski

WASHINGTON: The US economy grew at its fastest pace in more than two years in the second quarter, much faster than initially estimated, official data showed Wednesday.

Hitting the White House growth target for the first time in Donald Trump’s presidency, gross domestic product (GDP) increased 3% in the April-June period, the Commerce Department reported.

The figure was revised up by an unusually-large four tenths from the growth estimate published last month, due to higher consumer spending and business investment than in the initial report.

The rate surpassed analyst expectations, which called for an increase of 2.7%.

But growth in the first half of the year was just 2.1%, still below the 2.2% average recorded over the last three years.

The Trump administration has pledged to return the world’s largest economy to sustained annual growth of 3% or more by slashing taxes and regulations while boosting trade.

Economists have said this may be unrealistic and Trump’s growth agenda remains stalled in Congress.

Trump has alienated members of his own party, who face bruising battles next month over borrowing authority, adopting a budget and approving reconstruction aid for areas battered by Hurricane Harvey.

This second GDP estimate for the second quarter, which remains subject to revision, reflected higher sales of durable goods such as autos -- a sector which has struggled in the first half of the year after a record 2016.

The new figures also showed higher business spending on intellectual property products like computer software.

The faster growth rate could relieve the pressure on the Federal Reserve which has been divided over the course of monetary policy in recent months.

The central bank has raised interest rates twice this year but some market players doubt the Fed will hike a third time by December in light of persistently weak inflation.

The Fed has written off the low price pressures as merely “idiosyncratic” or “transitory” blips on the radar and the stronger second quarter could lend weight to this view. - AFP