The economy grew much more quickly last quarter than initially thought as businesses and consumers increased spending, the government said Thursday.
At 3.7 percent, the revised estimate for the annualized rate of economic expansion in the spring is more than a full percentage point higher than the initial reading of 2.3 percent reported by the Commerce Department in late July.
It provides further assurance that the American economy remains on an even keel, despite questions about whether the United States can skirt mounting economic turmoil in China and other emerging markets as well as a volatile stock market at home.
Much of the revision Thursday was powered by increased corporate spending. Business investment increased at a 3.2 percent annual rate in the second quarter, according to Commerce Department statisticians, compared with the initial estimate of a 0.6 percent decline.
Other tailwinds included a better trade picture, as net exports improved, and increased government spending, especially at the state and local level.
But companies also added to their stockpiles of goods, which could weigh on growth in the months ahead. Real private inventories increased at $ 121.1 billion pace in the second quarter, adding a little more than 0.2 percentage point to overall economic activity.
The upward adjustment was better than expected by economists on Wall Street, who predicted the revised growth rate would come in at 3.2 percent. This is the second estimate of economic growth for the second quarter; the third and final estimate will be released in late September.
"This was a very solid report and very much confirms our view that the U.S. economy is on a solid growth track," said Nariman Behravesh, chief economist at IHS, a private research and forecasting firm in Lexington, Mass. "The good news is that there was strength in many parts of the economy, both in terms of consumer spending and business sector investment."
Although the revision was certainly good news, investors are already turning their attention to fresher data to determine the economy's course and whether the Federal Reserve will make its long-awaited move to raise interest rates in September or wait until later meetings, in part because markets remain on edge.
In a separate report Thursday, the Labor Department said initial claims for unemployment benefits fell by 6,000 last week to 271,000 — a level that suggests the labor market remains healthy.
To be sure, the impact of the recent plunge in stock prices on the broader economy will not be known for some time. Growth data for the current quarter will be released in late October. And the statistics for the Labor Department's report on hiring and unemployment in August, due next week, were collected earlier this month, before the stock market correction took hold.
In midday trading on Thursday, major market indexes were up strongly, after Wednesday's big rally that lifted shares by about 4 percent.
Still, most economists suggest that whatever quarter-to-quarter zigzags there are in the numbers, the American economy continues to rumble along at a steady, if unspectacular pace.
Officially, the data paints a picture of a sharp slowdown in the beginning of 2015 and a pickup in the spring, with a slight deceleration likely this quarter. But the underlying growth rate all along has been in the neighborhood of 2.5 to 3 percent annually, Mr. Behravesh said.
"Would we like to see faster growth?" asked Mr. Behravesh. "Of course. But it has been enough to bring down the high level of unemployment."
Compared to the good years of the post-World War II era, he said, the growth rate is modest, adding that the American economy faces what he termed "speed limits," including the retirement of the baby boomers, slower population growth and weak productivity gains recently.
Mr. Behravesh now said he expected the growth rate to come in at 2 percent to 2.5 percent in the current quarter, and rebound to near 3 percent during October, November and December.
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