US Economy Grows 4%

After contracting in the first three months of 2014 due to adverse weather conditions, the US economy has bounced back with 4% growth in the second quarter of 2014

Morningstar News Team 30 July, 2014 | 4:00PM

The US economy grew at an annual rate of 4% in the second quarter, according to an initial government estimate. The figure marks a turnaround after gross domestic product registered its first decline in three years in the previous quarter. The rebound in the April to June period reflected gains in consumer spending and business inventory.

Consumer spending rose 2.5%, spurred by purchases of durable goods after growing just 1.2% in the previous quarter, the Bureau of Economic Analysis said. The boost in second quarter GDP outpaced economists' expectations. A survey of economists by Bloomberg news agency had predicted 3% growth in the period. Updated data showed first quarter growth fell a revised 2.1%, less than the 2.9% drop the Bureau of Economic Analysis reported last month.

The steep first quarter decline was attributed to an extremely hard winter that kept consumer spending down along with declines in private inventory investment and state and local government spending. The International Monetary Fund (IMF) last week lowered its 2014 growth forecast for the US economy, pointing to the extremely weak first quarter.

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