WASHINGTON (AP) — An uptick in consumer spending helped the U.S. economy expand at a surprising 3.8% from April through June, the government reported in a dramatic upgrade of its previous estimate of second-quarter growth.
U.S. gross domestic product — the nation’s output of goods and services — rebounded in the spring from a 0.6% first-quarter drop caused by fallout from President Donald Trump’s trade wars, the Commerce Department said Thursday. The department had previously estimated second-quarter growth at 3.3%, and forecasters had expected a repeat of that figure.
The first-quarter GDP drop, the first retreat of the U.S. economy in three years, was mainly caused by a surge in imports — which are subtracted from GDP — as businesses hurried to bring in foreign goods before Trump could impose sweeping taxes on them. That trend reversed as expected in the second quarter: Imports fell at a 29.3% pace, boosting April-June growth by more than 5 percentage points.
Consumer spending rose at a 2.5% pace, up from 0.6% in the first quarter and well above the 1.6% the government previously estimated. Spending on services advanced at a 2.6% annual pace, more than double the government’s previous estimate of 1.2%.
“The U.S. consumer remained a lot stronger than many thought, even in the midst of a stock market sell-off and a lot of trade uncertainty,” Heather Long, chief economist at Navy Federal Credit Union, posted on social media.