US economic growth hit 3.9% in second quarter

WASHINGTON - Agence France-Presse

AFP Photo

The US economy struck a peppy 3.9 percent annual growth rate in the second quarter, faster than originally thought and providing more fuel for a Fed rate hike, the Commerce Department said on Sept.25.

The new data confirmed the economy's rebound from a first-quarter stall, though since then it has settled to a more modest pace as global growth has slowed.
 
It also suits the Federal Reserve's plans to begin increasing interest rates despite weakness and market turmoil elsewhere.
 
Both investment and consumer spending -- keys to economic strength -- were stronger in the April-June period than in the previous growth estimate, which was 3.7 percent.
 
Investment in inventories was lower than previously thought, but that only suggested that inventory spending would remain solid through the current quarter.
 
The revised figure was better than expected, adding to arguments that the economy remains strong, despite weakness elsewhere in the world.
 
"The mix of growth is better, too, with less inventory accumulation (though still a lot) and stronger final sales growth," noted economist Chris Low of FTN Financial.
 
Still, US growth for all of 2015 is expected to be modest, 2.1 percent in the Federal Reserve's latest forecast.
 
The report came a day after Fed Chair Janet Yellen said that she still expected to begin raising interest rates by the end of the year, after having held the Fed's benchmark at zero since 2008.
 
After the Fed demurred on a hike last week, Yellen said late Thursday that improvements in the US economy "will likely entail an initial increase in the federal funds rate later this year."  

The dollar, which had risen after Yellen's remarks, edged up further to $1.1154 against the euro and to 120.90 yen.