A boom in exports and tax rebates to tens of millions of Americans helped bolster US economic growth to an annualized 1.9 percent during the second quarter, a government report showed on Thursday.
The Commerce Department said that GDP growth accelerated from a revised 0.9 percent pace during the first quarter.
Although US economic performance improved, it still fell short of the 2.3 percent hoped for by most economists.
“The weak dollar and rebates helped keep the economy shuffling along,” said Joel Naroff of Naroff Economic Advisors.
The latest growth snapshot was released ahead of a looming interest rate meeting of the Federal Reserve set for Tuesday. Economists expect the central bank to keep its short-term federal funds rate firmly pegged at 2 percent.
The government survey showed a surge in exports had helped fire up growth. An emergency US$168 billion economic stimulus, stuffed with one-off tax rebates, also stoked growth higher.
The review of the country’s US$14 trillion economy showed that second-quarter growth was the strongest since the third quarter of last year, but economists expressed concern about persisting economic headwinds.
Exports, underpinned by a weak dollar, boomed 9.2 percent during the April-June period, after rising 5.1 percent in the first quarter.
Imports meanwhile declined 6.6 percent, marking a sharper decrease than the 0.8 percent seen in the first quarter.
While the ailing dollar has lifted exports, Americans have shunned foreign purchases which the weak dollar has made more costly.
Exports added 2.42 percentage points to second-quarter growth, but some economists wondered if the export spike could be maintained.
“I’m not so sure those gains are sustainable, exports are likely to slow with the slowdown in Europe and Japan,” said Sal Guatieri, an economist at BMO Capital Markets.
By contrast, consumer spending added a mere 1.08 percentage points to quarterly growth. Economists watch consumer spending closely because it accounts for some two-thirds of GDP growth.
During the second quarter, consumer spending rose 1.5 percent against a 0.9 percent gain in the prior quarter despite Americans cutting back on purchases of big-ticket durable goods.
The US government meanwhile lowered its first-quarter growth estimate to 0.9 percent from 1.0 percent, and significantly trimmed its reading for the fourth quarter of last year to show a 0.2 percent contraction from a prior estimate of a 0.6 percent gain.
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