The U.S. economy grew more rapidly than initially estimated between the months of April and June, new government data showed Thursday morning, expanding at a 3.7 percent annualized rate.
The latest read on gross domestic product suggests that the economy is getting a significant boost from consumer and business spending, even as concerns spread about a slowdown in China and greater global volatility.
A previous estimate of second-quarter growth, released last month, showed the U.S. economy had expanded 2.3 percent. Ahead of this revision, economists had expected the number to bump up, but more modestly, to around 3.2 percent.
“I was just really, really pleased by the breadth of improvement,” said Michael Dolega, a senior economist at TD Bank. “You basically have that consumer strength, and at the same time businesses are investing despite the huge hit from energy.”
The GDP report provides a reassuring note about the underlying strength of the American economy and could push officials at the Federal Reserve to consider raising interest rates sometime in the next months. Such a move had been called into question by several top economists earlier this week as stock markets plunged amid concerns about the durability of Chinese growth.
Separately on Thursday, new data showed that initial jobless claims declined slightly last week, to 271,000, remaining near a historically low level.
"The Fed can be confident that the economy is in a healthy state" when it meets next month to discuss whether to raise rock-bottom interest rates for the first time in nearly seven years, Mike Jakeman, global analyst for The Economist Intelligence Unit, said in an e-mail.
Consumer spending in the second quarter grew at a rate of 3.2 percent, compared with the 2.9 percent pace in the original estimate last month. The fresh numbers suggest that Americans, despite stagnant wages, are getting a boost from cheaper prices at the pump, new jobs, and rising home prices.
The GDP figure in the second quarter also got a major push from business investment — that is, investment in research, equipment, land and development. The Commerce Department said that nonresidential investment increased 3.2 percent in the second quarter after barely budging in the previous six months. In the estimate from last month, business investment in the second quarter had actually been negative, dragging down the GDP.
Business investment had been sluggish throughout the recovery and was particularly weak earlier this year, as declining energy prices caused major cutbacks in the oil fields of Texas and North Dakota. But other sectors are booming. Investment in intellectual property — a good proxy for the software world — has grown 7.9 percent over the last year, the fastest pace since 2007.
For now, 2015 seems to be following the pattern of the previous year, with a sharp winter slowdown and then a recovery to more normal growth. Most economists say that, overall, the U.S. is still moving at the same steady but unspectacular pace seen throughout the recovery from the financial crisis. The International Monetary Fund predicts that the U.S. GDP will grow by 2.5 percent this year.