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Consumers are still the biggest drivers of the US economy.
On Friday, the Commerce Department released its second estimate of gross domestic product in the second quarter.
It showed that the economy grew 1.1%, revised lower from the 1.2% print earlier reported, and in line with economists’ expectations.
Personal consumption, which surged in the second quarter, was revised even higher, to a 4.4% rate from 4.2%. That was the fastest pace since the last three months of 2014.
Spending makes up two-thirds of GDP, so it’s the most important part of the economy. According to Bloomberg, the higher revision was mostly due to spending on used cars.
Strong consumer spending, which has been encouraged by a steady supply of jobs, should continue to allay concerns about an impending US recession. Workers’ wages in the second quarter were revised higher.
But business spending is still concerning.
The first estimate of Q2 GDP showed that the economy was bogged down by weak business spending, as company inventories shrank. This had more of an effect than previously thought and contributed to the small downward revision to headline GDP. Government and construction spending also weighed on the economy more than expected.
Friday’s release provided the first look at corporate profits in the second quarter and showed that they fell 1.2%, down from a 3.4% increase in the first quarter.
Core personal consumption expenditures, a measure of inflation that excludes volatile food and energy prices, was increased to 1.8% from 1.7%.