Second Quarter GDP Upwardly Revised from 2.6% to 3.0%

In the second quarter the US economy hit the growth target for the first time in Mr Donald Trump's presidency

Profits from current production - that is corporate profits adjusted for the value of unsold inventory and capital consumption - increased by $26.8bn in the second quarter.

The second estimate of the second quarter growth report implies that the USA economy is on a stronger footing than was expected earlier with revised up more than expected. Economists had expected that second-quarter GDP growth would be raised to a 2.7% rate.

Economists surveyed by MarketWatch expected a smaller upward revision in second-quarter GDP to a 2.8% rate. Increases in personal consumption expenditures (PCE) and in nonresidential fixed investment were larger than previously estimated.

The Department of Commerce will issue its third estimate for the second quarter September 28. The only major component to be downwardly revised was government that dropped 0.3 percent as federal spending gave less lift while state and local spending was more of a drag, noted TD Economics in a research report.

Additionally, private payrolls increased by 237,000 in August, largely through gains in the manufacturing and construction industries, CNBC reported on Wednesday. Economists saw a limited impact on growth from Hurricane Harvey, which devastated parts of Texas. ADP said 178,000 jobs were created in July.

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Growth at an annualised pace was 2.1% in the fourth quarter of 2016.

Despite the acceleration in consumer spending, inflation remained benign in the second quarter. The growth rate in the January-March quarter was a lacklustre 1.2%.

Rest of the upward revision was connected to non-residential fixed investment that rose 6.9 percent from the initial estimate of 5.2 percent. But he said 0.4 percentage point of that forecast reflects an assumption that the Trump administration will win a tax cut package that will take effect in early 2018 and the economy will also be boosted by higher spending on the military and infrastructure projects. The economy grew 2.1% in the first half of 2017 but economists said it was unlikely growth this year would meet Trump's goal. That was the fastest in almost two years and was an upward revision to the 8.2 percent pace reported last month.

This came in much higher than the 185,000 forecast by analysts, and upped the ante on expectations for Friday's report, where forecasts now sit at 180,000 - which is close to the average monthly increase this year.

Net exports added 0.21 percentage point to growth.

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