August 24, 2014

Economy grew 4% in 2Q

July 31. 2014 – The U.S. economy grew 4 percent in the second quarter, according to first-estimate data from the Bureau of Economic Analysis analyzed by NAFCU Senior Economist Curt Long.

"The strong showing in the second quarter confirms that much of the weakness from the first quarter was related to unseasonably frigid weather," Long said in a NAFCU Macro Data Flash. "The rebound in GDP can be attributed to strong contributions in inventory accumulation and personal consumption." The first quarter gross domestic product was revised to a decline of 2.1 percent.

GDP data showed residential investment increased 7.5 percent, nonresidential investment increased 5.5 percent, consumer spending increased 2.5 percent and government spending increased 1.6 percent.

Core personal consumption expenditures inflation – the Fed's key inflation metric – increased from 1.2 percent in the first quarter to 2 percent in the second quarter. Overall PCE inflation increased from 1.4 percent in the first quarter to 2.3 percent in the second quarter.

"Overall and core PCE inflation both moved closer to the Fed's target inflation rate in the second quarter," Long said. "The economy is expected to improve throughout the year as the labor market improves and pent-up demand is released."