U.S. Economy Growth

WASHINGTON (Reuters) – The U.S. economy grew faster than initially thought in the second quarter, bolstered by strong consumer spending and a rebound in corporate profits, indicating sustained expansion.

Gross domestic product (GDP) rose at a 3.0% annualized rate in the last quarter, according to the Commerce Department’s Bureau of Economic Analysis. This marks an upward revision from the previously reported 2.8% rate.

The economy’s growth rate was 1.4% in the first quarter. Economists had predicted no change from the 2.8% growth.

Consumer spending, which constitutes over two-thirds of the economy, saw an increase at an upwardly revised 2.9% rate, up from the earlier 2.3%. This rise offsets declines in business investment, exports, and private inventory investment.

Spending is supported in part by wage gains, but momentum appears to be slowing as the labor market shifts. Personal income grew by $233.6 billion in the second quarter, a downward revision of $4.0 billion from prior estimates.

Corporate profits, including inventory valuation and capital consumption adjustments, saw an increase of $57.6 billion after a drop of $47.1 billion in the first quarter. Profits in domestic financial firms increased by $46.4 billion, while profits from non-financial institutions rose by $29.2 billion, more than offsetting an $18.0 billion decline in global profits.

Measured from the income side, the economy grew at a 1.3% rate last quarter, with Gross Domestic Income (GDI) also increasing at a 1.3% pace in the January-March quarter.

While GDP and GDI should theoretically be equal, discrepancies exist due to their reliance on different source data. The average of GDP and GDI — termed gross domestic output — rose at a 2.1% rate last quarter, following a 1.4% advance in the first quarter.