Economists had expected GDP to increase by 2.6% in the second quarter compared to the 1.4% growth that had been reported for the previous quarter. President Donald Trump has set an ambitious 3.0 per cent growth target for 2017.
What's held this current economy from growing at a faster pace, he says, is a mix of things including "policy mistakes.political infighting in Washington.and business uncertainty".
The economy also benefited far more modest inventory reductions, which had been a drag on growth during the first quarter. Two and half percent is not great, but it's not bad, and it is a full point above average economic growth during the Obama administration and half a point above the "Obama recovery" era.
Consumer spending, which represents more than two-thirds of all USA economic output, came in at a stronger than anticipated 2.8% annual rate.
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The report could bolster expectations for another interest rate hike from the Bank of Canada, which earlier this month raised rates for the first time in almost seven years. Annual wage growth has struggled to rise above 2.5 percent. Inflation as measured by the PCE price index increased at a 0.3% annual rate. Exports increased by 4.1% even after Q1's big upward swing of 7.3%, while imports increased at a slower pace (2.1%) over Q1 (4.3%).
The pick-up was helped by consumer spending in the quarter expanding at a pace of 2.8%, and businesses stepping up spending on equipment.
The economy performed slightly better over the past three years than previously believed, thanks in part to a boost from how the government accounts for gasoline sales.
While businesses probably continued to carefully manage their inventories, they appeared to spend more in some places. It also follows a hard week for the West Wing in which new communications director Anthony Scaramucci was quoted using expletives to describe top aides Reince Priebus and Steve Bannon.
Alongside the second-quarter GDP report, the government published revisions to data going back to 2014, which showed little change in the growth picture.