Newsroom

The U.S. economy grew at a slightly faster pace during the second quarter than previously thought, according to the Commerce Department's final estimate, hitting 1.4 percent growth compared to the previous estimate of 1.1 percent.

The upward revision for non-residential investment went from -0.9 percent in the previous estimate to +1 percent as businesses' structural investments declined less than previously estimated, noted NAFCU Chief Economist and Director of Research Curt Long.

The Bureau of Economic Analysis data also revealed that net exports and inventory accumulation saw minor positive adjustments in the final estimate, while consumer spending and government expenditures were revised slightly downward.

"Despite the upward revision, growth was sluggish in the first half of 2016 as fixed investments declined and inventory accumulation slowed," Long noted in a NAFCU Macro Data Flash report. "On the positive side, consumer spending continues to boost the economy as the labor market tightens and wage growth picks up."

Personal consumption expenditure inflation, the Fed's preferred inflation metric, was 2 percent in the second quarter, up from 0.3 percent in the first quarter. Core PCE inflation (excluding food and energy) decreased from 2.1 percent in the first quarter to 1.8 percent in the second quarter.

Real gross domestic income decreased 0.2 percent in the second quarter, its first decline since early 2013.

"Overall, the economy is expected to expand further in the second half of year," Long said. "The Federal Reserve of Atlanta currently expects GDP to grow 2.8 percent in the third quarter. Recent comments from Fed officials also suggest that the FOMC sees the economy as drawing nearer to the point that would warrant a rate hike."