Washington: The US economy rebounded in the second quarter, growing at a peppy 4.0 percent pace after the first quarter`s sharp contraction, the Commerce Department said Wednesday.
In a sign that the economy is stronger than earlier thought, the department also revised its estimate of the January-March contraction to 2.1 percent, compared to the more severe 2.9 drop percent previously reported.
The initial estimate of second-quarter growth showed solid rebounds in private investment and consumer spending, especially on durable goods, suggesting that the severe winter weather and a modest slump in confidence between December and March were indeed behind the slowdown, as economists have said.
Private investment soared 17.0 percent in the second quarter, after shrinking 6.9 percent in the previous period. Investment was strong in both equipment and homes.
Personal consumption expenditures grew 2.5 percent in the second quarter compared to 1.2 percent the previous period, and spending on consumer durable goods leaped 14.0 percent.
The country`s chronic trade deficit was also less of a drag on growth after exports rebounded sharply from the first quarter decline. Taken as a net -- imports detract from gross domestic product -- the trade deficit took 0.61 percentage point off growth, compared to 1.66 points in the first quarter.
"The upturn in part reflects a rebound from the first quarter, when adverse weather disrupted businesses across many parts of the country," said Chris Williamson, chief economist at Markit.
"However, this is not just a case of better weather. There is evidence to indicate that there has also been an underlying improvement in the economy, and that robust growth will be sustained into the third quarter."
