After a bleak start to the year, the US economy grew at a brisk annual rate of 4.2 percent in the April-to-June quarter, the government said on Thursday, slightly faster than it had first estimated.
The US Department of Commerce’s second estimate of growth for the US economy last quarter followed its initial estimate of 4 percent. The upward revision reflected stronger business investment than first thought.
The seasonally adjusted 4.2 percent annual growth rate for GDP came after the economy had shrunk at a 2.1 percent annual rate in the January-to-March quarter.
Photo: EPA
At a White House news conference on Thursday, US President Barack Obama took note of the upward revision to growth.
“There are reasons to feel good about the direction we are headed,” Obama said. “Companies are investing, consumers are spending.”
Still, Obama said he would press Congress when it returns next week to take further action to boost the economy.
The government’s upwardly revised estimate of business investment last quarter showed capital spending growing at an annual rate of 8.4 percent last quarter. That was sharply higher than the government’s initial 5.5 percent estimate.
With the wild swing between the first-quarter’s sharp slump and the vigorous rebound last quarter, annual economic growth in the US has averaged a meager 1.1 percent for the first six months of this year.
Because of the rocky start, economists think growth for this year could average just 2.1 percent, little changed from last year’s 2.2 percent increase.
The IMF on Thursday urged the US to boost incomes for the poor, including raising the minimum wage, saying that would help sustain the country’s rebound from the 2007 to 2009 financial crisis.
Senior IMF economist Deniz Igan said in a report posted on the IMF’s Web site that the combination of a higher minimum wage and an increase in a key tax benefit would help lift people out of poverty.
The costs to the economy would be minimal, she said, while the benefits, in a country with almost 50 million poor, could go far in reversing the “vicious cycle” of poverty.
Plunging into a fight that has divided the major US political parties, Igan rejected arguments that increasing the minimum wage, now US$7.25 an hour, would cause companies to hire significantly fewer workers.
At that rate, she said, a single parent would be earning well below the official poverty line of US$16,057 a year.
Increasing their incomes could give poor families, who often live hand-to-mouth, more financial cushion. At the same time, she said: “Research shows a relatively small effect on employment.”
Additional reporting by AFP
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