US Economy Revives in Second Quarter

US economic growth revived in the second quarter of 2014, expanding at an annual rate of 4% in the three months to the end of June according to the Commerce Department.

There was also better news on US gross domestic product (GDP) in the first quarter of the year. The figure for Q114 GDP originally showed a -2.9% contraction, reflecting the impact of a harsh winter, but the figure was revised down to -2.1%.

In its initial estimate for Q2, the government cited gains in personal consumption spending, exports and private inventory investment as the main contributors to growth. The 4% gain was ahead of many analysts’ forecasts, with general consensus that the figure would be nearer 3%.

The data was seen as confirming that the Q1 decrease in US output was likely a blip, due mostly to unusually severe winter weather in early 2014 as well as other anomalies.

Despite the improvement in the general economy, Q2 earnings for many US companies were mixed, while house prices are rising at the slowest pace in more than a year.

Many economists believe that a subdued US housing market and moderate earnings will persuade the Federal Reserve to hold off authorising any rise in US interest rates until well into 2015.


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