US Economy Rebounds Faster Than Expected in Second Quarter

The Commerce Department says the U.S. economy expanded at its fastest pace in more than two years – growing at an annualized rate of 4.6 percent from April through June.  That’s a positive sign for the rest of the year, after a disastrous first quarter saw the country’s domestic output shrink by more than two percent. 

Some economists say it’s a sure sign the U.S. economy is on the mend, but others say it’s too soon to celebrate.

The U.S. economy is bouncing back following a severe winter that shut down hundreds of businesses and kept American consumers at home.  But don’t uncork the champagne just yet, says senior financial analyst Greg McBride.

“It’s certainly nice to see a rebound after the disastrous first quarter that we had,” he said.  “But as I like to say – one in a row is not a streak.”

Much will depend on whether the trend continues in the third and fourth quarters of 2014.

Even if it does – the decline in the first three months of the year means the gross domestic product – the broadest measure of the nation’s economic output – is unlikely to exceed last year’s pace of 2.2 percent.  

But if Wall Street had any doubts about the recovery – they’re not showing it. 

The new growth figures pushed stock prices higher – just as a new survey showed consumer confidence at its highest level in more than a year.   

“I think it does suggest the U.S. economy is moving forward, it’s moving forward at a moderate pace, and the condition of U.S. businesses is such that they’re increasing their investment spending,” said David Stockton, a senior fellow at the Peterson Institute for International Economics.


Increased business spending and higher export rates bode well for the U.S. job market.  Despite the modest job growth in the past year, wages have remained mostly stagnant. 

But McBride believes that’s changing.

“The leading category for job growth here in 2014 is professional and business services, so these tend to be higher paying jobs,” he said.  “The job market actually has a little bit of momentum going for it –  that’s the good news – and has been far more consistent than what we’ve seen in terms of economic growth.”

Economists expect to have a clearer picture of employment trends October 3.  That’s when the U.S. Labor Department releases its much anticipated monthly job numbers.

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